compliance-recommendations-letter.docx

1017-00004 · Entities. Aurelius Global Media Group · Closing

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CALDERWOOD & HARKNESS LLP Attorneys at Law 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201 www.calderwoodharkness.com

February 14, 2024

VIA EMAIL AND FIRST-CLASS MAIL

Mr. Gregory Tanaka Vice President, Legal & Compliance Aurelius Media Americas Inc. 8500 Sunset Boulevard, Suite 1400 West Hollywood, California 90069

Ms. Lorraine Okafor Senior Vice President, Human Resources Aurelius Media Americas Inc. 8500 Sunset Boulevard, Suite 1400 West Hollywood, California 90069

ATTORNEY-CLIENT PRIVILEGED COMMUNICATION — DO NOT FORWARD WITHOUT AUTHORIZATION OF COUNSEL

Re: Post-Settlement Compliance Recommendations — Meal and Rest Break Policy Revisions, Timekeeping System Modifications, and Restrictive Covenant Best Practices

C&H Matter No.: 1017-00004

Dear Mr. Tanaka and Ms. Okafor:

In connection with the resolution of Fuentes v. Aurelius Media Americas Inc., Case No. 22STCV38214, Superior Court of the State of California, County of Los Angeles (Final Approval Order entered February 9, 2024, approving a class-wide settlement of $14,750,000), and the related individual action, Aldrich v. Aurelius Media Americas Inc., Case No. 22STCV41087 (confidential settlement of $2,350,000, dismissed with prejudice on January 29, 2024), Calderwood & Harkness LLP provides the following compliance recommendations designed to mitigate AMA's future litigation risk across the wage-and-hour and restrictive covenant domains implicated by both matters. These recommendations are informed by the discovery record in both cases, the rulings of the Court (Hon. Raymond Escobedo, Dept. 34), the settlement terms, and the current state of California employment law.

We note at the outset that these recommendations are advisory in nature and are not mandated by any court order or settlement provision. Nonetheless, we strongly recommend that AMA implement them promptly. Doing so will serve two important purposes: first, it will demonstrate good faith in the event of any future regulatory inquiry or private litigation; and second, it will materially reduce AMA's exposure to the types of wage-and-hour claims and restrictive covenant disputes that gave rise to the Fuentes and Aldrich matters. The combined cost of those two matters — $17,100,000 in settlement value alone, exclusive of attorneys' fees, expert costs, and the substantial internal resources devoted to discovery and mediation over the course of approximately eighteen months — underscores the imperative of proactive compliance.

Our recommendations are organized into three categories, reflecting the three principal areas of risk identified through this litigation:

I. Meal and Rest Break Policies

II. Timekeeping System Modifications

III. Restrictive Covenant Best Practices

We address each in turn below.

I. MEAL AND REST BREAK POLICIES

The meal and rest break claims constituted the core of the Fuentes class action and accounted for the substantial majority of the class settlement value. While the settlement resolves all released claims for the class period, AMA's ongoing compliance posture in this area will be the single most important factor in determining whether AMA faces similar litigation in the future. The following recommendations address the three principal areas of concern: the written meal period policy, second meal period compliance, and rest period training.

A. Revised Meal Period Policy — Five-Hour Threshold

AMA's written meal period policy must be revised to explicitly reference the five-hour threshold for the first meal period, consistent with IWC Wage Order 12 (8 Cal. Code Regs. § 11120) and California Labor Code section 512. As a company operating in the motion picture industry, AMA's California-based workforce is governed by Wage Order 12, which applies to all of AMA's approximately 2,400 California-based employees across its seven production facilities and fourteen show units.

This revision is necessary to correct a discrepancy that was identified during the course of the Fuentes litigation and that constituted a significant factor in the Court's class certification analysis. Specifically, the NovaPay Solutions TimeTrack Pro system was configured to trigger the automatic thirty-minute meal period deduction at six hours rather than five hours — a configuration error that resulted in employees who worked shifts of between five and six hours being denied meal periods (or, more precisely, having no system-level safeguard ensuring the provision of a meal period). This discrepancy was corrected in December 2022 as part of AMA's remedial efforts during the pendency of the litigation; however, the written policy distributed to employees has not been updated to reflect the corrected system configuration or to state the legal standard with precision.

The revised policy should include the following elements:

1. First Meal Period. All non-exempt employees are entitled to a thirty-minute uninterrupted, duty-free meal period for any shift exceeding five hours of work. The first meal period must commence no later than the end of the employee's fifth hour of work (i.e., before the employee begins the sixth hour). During the meal period, the employee must be relieved of all duties and must be free to leave the premises.

2. Second Meal Period. A second thirty-minute uninterrupted, duty-free meal period is required for any shift exceeding ten hours of work. The second meal period must commence no later than the end of the employee's tenth hour of work (i.e., before the employee begins the eleventh hour).

3. Waiver of First Meal Period. If the total work period for the day will not exceed six hours, the first meal period may be waived by mutual consent of the employer and the employee. Any such waiver must be documented in writing.

4. Waiver of Second Meal Period. If the total work period for the day will not exceed twelve hours, the second meal period may be waived by mutual consent of the employer and the employee, but only if the first meal period was not waived. Any such waiver must be documented in writing.

5. Meal Period Premium. If an employee is not provided a compliant meal period as required by this policy, the employee shall receive one additional hour of pay at the employee's regular rate of compensation for each workday on which a meal period violation occurs, in accordance with California Labor Code section 226.7.

The revised policy should be distributed to all non-exempt employees at all seven California facilities and across all fourteen show units. Each employee should be required to sign a written acknowledgment confirming receipt and understanding of the revised policy. Signed acknowledgments should be retained in each employee's personnel file for a minimum of four years, which covers the applicable statute of limitations period for Labor Code claims (three years under Code of Civil Procedure section 338, or four years if brought as an unfair business practices claim under Business and Professions Code section 17200).

In addition, AMA should audit whether any of its show units currently rely on on-duty meal period agreements. Under Wage Order 12, an on-duty meal period is permissible only where: (a) the nature of the work prevents the employee from being relieved of all duty; (b) the employee has consented to the on-duty meal period in a written agreement; and (c) the written agreement states that the employee may revoke the agreement at any time. If any show units are utilizing on-duty meal period agreements, AMA should review each such agreement to ensure strict compliance with these requirements and should consult with this firm before entering into any new on-duty meal period agreements. The on-duty meal period exception is narrow and is construed strictly by California courts; improper reliance on this exception has been the basis for substantial meal period premium liability in other entertainment industry cases.

B. Second Meal Period Compliance

Second meal period compliance presents a particular challenge for AMA's entertainment industry production operations, where twelve- to sixteen-hour shooting days are common, particularly for field-based and live events show units. Although the Court's August 11, 2023 class certification order denied certification of the second meal period sub-class — finding that second meal period claims were too dependent on the specific production schedules, shooting locations, and operational circumstances of individual show units to be amenable to class-wide resolution — this ruling does not eliminate AMA's exposure. To the contrary, the denial of class certification on this issue means that AMA may face a multiplicity of individual claims, each litigated on its own facts, which can be administratively burdensome and costly to defend even where liability is uncertain.

To address this risk, we recommend the following measures:

1. Mandatory Scheduling Prompt in TimeTrack Pro. AMA should work with NovaPay Solutions to implement a mandatory scheduling prompt in the TimeTrack Pro system that is triggered when an employee's shift approaches the ten-hour mark. The prompt should be delivered to both the employee and the responsible supervisor — typically the Unit Production Manager ("UPM") or Line Producer for production-day operations — alerting them that a second meal period is due. The prompt should be configurable to fire at a designated interval before the end of the tenth hour (we recommend thirty minutes prior, i.e., at the nine-and-a-half-hour mark) to allow sufficient time for scheduling the break.

2. Daily Call Sheet Integration. AMA should require that each daily call sheet for production days include a designated second meal period time for any crew expected to work beyond ten hours. This should be a mandatory field on the call sheet template, and UPMs and Line Producers should be trained that the omission of a second meal period from the call sheet for a crew scheduled to work beyond ten hours is a compliance violation.

3. Particular Attention to High-Risk Show Units. Certain show units present elevated risk due to the logistical challenges of their production environments. Field-based show units — including, for example, "Summit Challenge," which is coordinated from AMA's Burbank facility at 3800 W. Alameda Avenue, Burbank, California 91505 — frequently involve remote shooting locations where the provision of uninterrupted, duty-free meal periods is logistically difficult. Similarly, live events operations, where production schedules are driven by real-time event timing, present comparable challenges. AMA should develop show-unit-specific meal period protocols for these high-risk operations, taking into account the unique scheduling and logistical constraints of each unit, and should designate a compliance point person within each such unit who is responsible for ensuring that second meal periods are scheduled and provided.

C. Rest Period Training

AMA should institute annual mandatory training for all supervisory personnel — including Unit Production Managers, Line Producers, department heads, and any other individuals with authority to direct the work of non-exempt employees — on California rest period requirements. While the Court's August 11, 2023 certification order denied class certification of the rest period sub-class, finding no systemic evidence of a policy or practice of denying rest periods, the fourteen formal complaints received by AMA's Human Resources department during the class period (2019–2022) relating to meal and rest break issues indicate that rest period compliance is an area warranting proactive attention.

The training should cover the following topics:

1. Entitlement. Non-exempt employees are entitled to a net ten-minute paid rest period for every four hours worked, or major fraction thereof. The phrase "major fraction thereof" means any period exceeding two hours. Accordingly, an employee working a shift of three and one-half to eight hours is entitled to one rest period; an employee working a shift of more than six hours and up to ten hours is entitled to two rest periods; and an employee working a shift of more than ten hours is entitled to three rest periods.

2. Timing. Rest periods should, insofar as practicable, be scheduled in the middle of each four-hour work period. While exact mid-point scheduling is not always feasible in a production environment, supervisors should make good-faith efforts to provide rest periods at or near the midpoint and should not routinely schedule rest periods at the very beginning or end of a work period.

3. Duty-Free. Rest periods must be duty-free. During a rest period, the employee must be relieved of all work duties and must be free from employer control. Supervisors may not require employees to remain "on call" or "on standby" during rest periods, carry radios or communication devices in a manner that effectively prevents the employee from resting, or perform any work tasks.

4. Production Culture. The training should directly address the production-day culture prevalent in the entertainment industry, in which stopping production for breaks may be perceived as disruptive to filming schedules, costly, or impractical. Supervisors must understand that, regardless of production pressures, the legal obligation to authorize and permit rest periods is non-negotiable. Production schedules must be designed to accommodate legally mandated rest periods, not the other way around.

5. Premium Pay. If an employee is not authorized and permitted to take a compliant rest period, the employee is entitled to one additional hour of pay at the employee's regular rate of compensation for each workday on which a rest period violation occurs, pursuant to California Labor Code section 226.7.

Because rest periods are paid time, they are not tracked in the TimeTrack Pro system, which is consistent with industry practice and legal requirements (employers may not require employees to remain on the premises during rest periods, and tracking rest periods through a time clock system could be construed as a form of employer control). As a result, supervisory compliance is the primary safeguard against rest period violations, which makes the training of supervisors particularly critical.

AMA should document training attendance — including the name, title, and facility or show unit of each attendee — and retain copies of all training materials. These records should be maintained for a minimum of four years, consistent with the statute of limitations considerations discussed above. We recommend that the first training cycle be completed no later than June 30, 2024, with annual refresher training thereafter.

II. TIMEKEEPING SYSTEM MODIFICATIONS

The configuration and operation of the NovaPay Solutions TimeTrack Pro timekeeping system was the central factual issue in the Fuentes litigation. The automatic meal period deduction — and, critically, the inconsistent activation of the Missed Meal Attestation feature across AMA's California facilities — was the primary vulnerability that drove the Court's class certification order and, ultimately, the settlement. The following recommendations are designed to address the systemic weaknesses identified in the litigation and to position AMA's timekeeping practices to withstand scrutiny in any future proceeding.

A. Elimination of Auto-Deduction — Transition to Affirmative Meal-Period Acknowledgment System

We strongly recommend that AMA discontinue the automatic thirty-minute meal period deduction currently applied in the TimeTrack Pro system and transition to an affirmative meal-period acknowledgment system.

Under the current system — even as corrected in December 2022 — the TimeTrack Pro system automatically deducts thirty minutes from the employee's recorded work time for shifts exceeding five hours, on the assumption that the employee received a compliant meal period. The system includes a Missed Meal Attestation feature that allows employees to override the automatic deduction by affirmatively reporting that they did not receive a compliant meal period. However, as the Fuentes litigation demonstrated, this override mechanism was not consistently available or effectively communicated to employees.

The proposed affirmative meal-period acknowledgment system would operate differently. Rather than assuming that a meal period was taken and requiring the employee to affirmatively report a violation, the system would require the employee to affirmatively confirm, at the end of each qualifying shift, that a compliant, uninterrupted thirty-minute meal period was received. This confirmation would be made by selecting an option on the time clock terminal (e.g., a prompt reading: "Did you receive an uninterrupted 30-minute meal period today? Select YES or NO"). If the employee selects "NO" or fails to respond to the prompt before the end of the pay period, the system would automatically flag the shift for supervisory review and, if no documented waiver or other lawful basis for the absence of a meal period is identified, would automatically trigger a one-hour meal period premium payment in the next pay cycle.

The rationale for this transition is both legal and practical:

1. Auto-Deduction Policies Are Disfavored. Automatic meal period deduction policies are disfavored by California courts and are a primary target of plaintiff-side wage-and-hour counsel. Even where an auto-deduction system includes an attestation or override feature, the auto-deduction creates a presumption that operates against the employer: the employer is effectively assuming compliance and placing the burden on the employee to report a violation. In a litigation posture, this framework is difficult to defend, because it requires the employer to prove that employees were aware of the override mechanism, understood how to use it, and were not discouraged from using it — all of which are fact-intensive inquiries that favor class certification and plaintiff-favorable outcomes.

2. The *Fuentes* Litigation Record. The core finding that drove the class certification order and the settlement in Fuentes was the combination of the auto-deduction and the inconsistent activation of the Missed Meal Attestation feature. Specifically, the Missed Meal Attestation feature was deactivated at three of AMA's seven California facilities — Facility 2 (Studio City, 4024 Penmark Strategy Partners Avenue, Studio City, CA 91604), Facility 4 (Burbank, 3800 W. Alameda Avenue, Burbank, CA 91505), and Facility 7 (El Segundo, 888 N. Sepulveda Boulevard, El Segundo, CA 90245) — for the period from March 2019 through December 2022. At the four facilities where the feature was active during that period, usage rates ranged from 2.1% to 4.1% of qualifying shifts. The Court (Hon. Raymond Escobedo, Dept. 34) found that these low attestation usage rates "raise serious questions about whether the feature was effectively communicated to employees" and observed that "a mechanism that employees do not know about is functionally equivalent to no mechanism at all." These findings were central to the Court's conclusion that common questions of law and fact predominated over individual issues, warranting class certification of the meal period claims.

3. Shifting the Burden. An affirmative acknowledgment system fundamentally shifts the evidentiary framework. Rather than the employer assuming compliance and relying on employee-initiated override, the employee affirmatively confirms compliance at the end of each shift. This creates an affirmative record — a contemporaneous, shift-by-shift attestation — that the employer can rely upon in the event of a subsequent claim. If an employee confirms receipt of a compliant meal period at the end of each shift and later claims that meal periods were not provided, the employer has a strong evidentiary basis for rebuttal. Conversely, if an employee reports a missed meal period, the system triggers an automatic review and premium payment, demonstrating the employer's good faith and responsiveness.

We recommend that AMA coordinate this transition with NovaPay Solutions. The appropriate point of contact at NovaPay is Marcus Yee, Director of Client Data Services, located at 2200 Powell Street, Suite 600, Emeryville, California 94608. NovaPay should be engaged to configure the new affirmative acknowledgment system within the TimeTrack Pro platform, develop user-facing prompt language, and provide training materials for both administrators and end users. We anticipate that the transition can be completed within sixty to ninety days of engagement. During the transition period, the existing system should continue to operate with the Missed Meal Attestation feature fully activated at all facilities, as discussed in Section II.B below.

B. Missed Meal Attestation Feature — Universal Activation and Ongoing Monitoring

To the extent that AMA retains any version of the automatic meal period deduction during the transition period described above, the Missed Meal Attestation feature must remain activated at all seven California facilities at all times, without exception. The deactivation of this feature at three facilities for a period of nearly four years was the single most damaging fact in the Fuentes litigation and must not be permitted to recur.

Beyond ensuring universal activation, AMA should implement the following ongoing monitoring and compliance measures:

1. Quarterly Audits. AMA should conduct quarterly audits to confirm the continued activation of the Missed Meal Attestation feature at all seven facilities. These audits should include a review of system configuration settings, verification that the feature is functioning as intended on all time clock terminals, and a review of attestation usage data for the preceding quarter. Audit results should be documented and retained.

2. Designated Compliance Officer. AMA should designate a specific individual as the compliance officer responsible for monitoring attestation data and ensuring the continued functioning of the feature. We recommend assigning this responsibility to Karen Fong, Payroll Manager, or, if resources permit, creating a dedicated HR compliance role with this as a core function. The designated compliance officer should receive direct reports from NovaPay Solutions regarding any system configuration changes, updates, or outages affecting the attestation feature.

3. Investigation of Anomalous Data. The designated compliance officer should investigate any facility or show unit exhibiting attestation rates that are either abnormally low or abnormally high. Abnormally low attestation rates (substantially below the expected range given historical data) may indicate that employees at that facility are unaware of the attestation feature or are being discouraged — explicitly or implicitly — from using it. Abnormally high attestation rates may indicate systemic meal period violations at the facility, which would warrant a separate investigation and corrective action. In either case, the investigation should be documented and any corrective measures should be implemented promptly.

4. Formal Training on the Attestation Feature. Formal training on the existence, purpose, and operation of the Missed Meal Attestation feature should be incorporated into the onboarding process for all new non-exempt employees and into annual refresher training for all existing non-exempt employees. The absence of formal training materials specifically addressing the attestation feature was identified as a significant gap during the Fuentes litigation. Ms. Okafor testified during her deposition that AMA did not conduct formal training regarding the attestation feature and that employee awareness of the feature was dependent on informal communications from supervisors — a practice that is plainly insufficient to ensure universal awareness and that contributed directly to the low usage rates cited by the Court in its certification order. All training should be documented, including the names and positions of attendees, the date and location of training, and the training materials used.

C. Pre-Shift and Post-Shift Time Recording

AMA should instruct all non-exempt employees to clock in at the time they begin performing any work-related tasks and to clock out only after all post-shift tasks have been completed. This instruction should be communicated both in the revised timekeeping policy and in supervisory training.

Work-related tasks that require clock-in include, but are not limited to: pre-shift setup activities such as setting up equipment, logging in to editing systems, powering up and configuring workstations, attending pre-production briefings, and reviewing call sheets or production notes. Post-shift tasks that must be completed before clock-out include: post-production wrap activities, logging footage, completing continuity reports, securing equipment, and attending post-production debriefings.

Supervisors should be trained to ensure that official call times align with expected clock-in times. If pre-call-time work is anticipated or expected — for example, if a camera operator is expected to arrive early to set up equipment before the official call time — the call time should be adjusted to reflect the actual time at which work is expected to begin, and the employee should be instructed to clock in at that earlier time. The practice of setting a call time that is later than the time at which work is actually expected to commence is a common source of off-the-clock work claims in the entertainment industry and should be eliminated.

While the Court denied class certification of the off-the-clock claims in the Fuentes action — finding that such claims were inherently individualized, dependent on the specific circumstances of each employee's work and the practices of each supervisor and show unit — the underlying conduct, if it is occurring, remains a violation of California Labor Code sections 510 and 1194, and remains actionable on an individual basis.

AMA's production protocols should be revised to include an explicit statement that no non-exempt employee is expected or permitted to perform work-related tasks before clocking in or after clocking out. This statement should be included in the daily call sheet template and should be reinforced through supervisory training. Any supervisor who directs or knowingly permits off-the-clock work — whether by explicit instruction, implicit expectation, or acquiescence — should be subject to progressive disciplinary action, up to and including termination.

III. RESTRICTIVE COVENANT BEST PRACTICES

The Aldrich matter highlighted the significant risks associated with AMA's current restrictive covenant practices, particularly the inclusion of non-competition clauses in employment agreements with California-based employees. The following recommendations are designed to bring AMA's restrictive covenant practices into compliance with current California law, to minimize litigation risk, and to ensure that AMA retains effective contractual protections for its legitimate business interests — specifically, the protection of confidential information and the prevention of unfair solicitation.

A. Elimination of Non-Competition Clauses for California-Based Employees

AMA should immediately remove non-competition clauses from all employment agreements with California-based employees. Non-competition clauses are void and unenforceable in California, and any attempt to enforce them — or even to include them in employment agreements — exposes AMA to significant legal and financial risk.

The legal framework is clear and well-established:

1. California Business and Professions Code Section 16600. Section 16600 provides, in relevant part, that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." This prohibition is broad and is not subject to a "reasonableness" analysis; unlike many other states, California does not recognize an exception for non-compete agreements that are "reasonable" in scope, duration, or geographic reach.

2. Edwards v. Kraft Quill CPAs LLP. The California Supreme Court confirmed the breadth of section 16600 in Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, holding that section 16600 invalidates non-competition agreements except for the narrow statutory exceptions set forth in sections 16601 through 16602.5 (which apply to the sale of a business, the dissolution of a partnership, and the dissolution or sale of a limited liability company — none of which are applicable to employment agreements).

3. AB 1076 (Cal. Bus. & Prof. Code § 16600.5). Effective January 1, 2024, AB 1076 codified as section 16600.5 expressly prohibits employers from entering into or attempting to enforce any noncompete clause or noncompete agreement with an employee or prospective employee, regardless of where the agreement was signed or where the employer is headquartered. Section 16600.5 further provides that any such clause or agreement is void, regardless of whether the contract was signed and the employment was maintained outside of California.

4. SB 699 (Cal. Bus. & Prof. Code § 16600.7). Also effective January 1, 2024, SB 699, codified as section 16600.7, makes it unlawful for an employer to enter into or attempt to enforce a noncompete agreement "regardless of whether the contract was signed and the employment was maintained outside of California." This provision extends the reach of section 16600 to agreements executed in other states or countries and is specifically designed to prevent employers from using choice-of-law provisions to circumvent California's prohibition on non-competes.

The Aldrich matter provided a concrete and costly illustration of the futility and risk of attempting to rely on non-competition clauses for California-based employees. The Aldrich Employment Agreement contained, at section 9.1, an eighteen-month post-termination non-competition clause that purported to prohibit Aldrich from engaging in any business competitive with AMA's entertainment production and media operations anywhere in the United States. The Employment Agreement also contained, at section 14.3, a New York choice-of-law clause that AMA initially hoped would save the non-compete from invalidation under section 16600.

Both provisions proved unenforceable. The non-competition clause at section 9.1 was voided by mutual agreement in the Aldrich settlement, consistent with section 16600. As to the choice-of-law clause, AMA's litigation team concluded — and we concurred — that a California court would not have enforced the New York choice-of-law provision to save the non-compete, because under the Restatement (Second) of Conflict of Laws section 187(2), a choice-of-law provision will not be enforced if the chosen state's law is contrary to a fundamental policy of the state whose law would otherwise govern and that state has a materially greater interest in the determination of the particular issue. California's prohibition on non-competition agreements is a fundamental public policy, and California — as both the state of Aldrich's employment and the state where AMA's operations are principally conducted — had a materially greater interest in the enforceability of the non-compete than New York.

AMA should conduct a comprehensive audit of all existing employment agreements with California-based employees and senior executives — including agreements that may have been executed under the oversight of AGMG's global legal team in London or other jurisdictions — to identify any agreements containing non-competition clauses. All such clauses should be removed by amendment or, where the agreement is being renewed or replaced, should be omitted from the successor agreement. This audit should cover not only current employees but also any former employees who may still be subject to post-termination non-competition obligations under their prior agreements, as any attempt to enforce such obligations would violate sections 16600, 16600.5, and 16600.7.

B. Notification Requirement Under AB 1076 and SB 699

Effective January 1, 2024, California Business and Professions Code section 16600.5(b) requires employers to notify current and former employees who were employed after January 1, 2022, in individualized written communication, that any non-compete clause or non-compete agreement that the employer has entered into with the employee is void.

AMA should send this notification to all affected employees no later than thirty days from the date of this letter — that is, by March 15, 2024. We emphasize the following requirements and best practices for this notification:

1. Individualized Communication. The notification must be sent by individualized written communication. A general mass email or a posting on an internal company bulletin board or intranet is not sufficient to satisfy the statutory requirement. We recommend that the notification take the form of a personalized letter or email addressed to each affected individual by name, referencing the specific employment agreement (by title and date) and the specific provision (by section number) that is being identified as void.

2. Scope of Affected Employees. The notification obligation extends to both current and former employees who were employed after January 1, 2022, and whose employment agreements contain non-compete clauses. AMA should cross-reference the results of the audit described in Section III.A above to identify the full universe of affected individuals.

3. Retention of Records. AMA should retain copies of all notifications sent, together with proof of delivery (e.g., email delivery receipts, certified mail return receipts, or electronic acknowledgment of receipt), for a minimum of four years. These records will be necessary to demonstrate compliance in the event of any regulatory inquiry or private litigation.

4. Consequences of Non-Compliance. Failure to provide the required notification may expose AMA to claims under section 16600.5(b), which provides for injunctive relief and an award of attorney's fees to the prevailing employee. Given the relatively low cost of compliance — drafting and sending individualized letters — and the significant potential exposure for non-compliance, prompt action is warranted.

We are prepared to assist AMA in drafting the notification letter and identifying the universe of affected current and former employees if requested.

C. Retain and Strengthen Confidentiality Protections

While non-competition clauses are unenforceable in California, confidentiality provisions remain fully enforceable and are AMA's most effective contractual tool for protecting its proprietary information and trade secrets. Unlike non-compete clauses, confidentiality obligations do not restrain an employee from engaging in a lawful profession, trade, or business; rather, they restrain the unauthorized disclosure and use of specific trade secrets and confidential information belonging to the employer. California courts have consistently upheld properly drafted confidentiality provisions as consistent with section 16600.

In addition to contractual confidentiality protections, AMA has independent statutory protection under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code section 3426 et seq., which provides remedies — including injunctive relief, compensatory damages, and exemplary damages for willful and malicious misappropriation — for the misappropriation of trade secrets, regardless of whether the parties have entered into a confidentiality agreement.

The Aldrich matter demonstrated the practical value of strong confidentiality protections. While AMA's non-competition clause (section 9.1 of the Aldrich Employment Agreement) was unenforceable, AMA's confidentiality provision (section 9.4) provided a fully enforceable contractual basis for AMA's cross-claims. AMA's cross-claims for breach of section 9.4 and for misappropriation of trade secrets under CUTSA provided significant leverage in the settlement negotiations and were a material factor in achieving the settlement terms, which included the continuation of Aldrich's confidentiality obligations under section 9.4 in full force and in perpetuity. The enforceability and strength of the confidentiality provisions offset, in substantial part, the loss of the non-compete as a contractual tool.

We recommend the following measures to strengthen AMA's confidentiality protections:

1. Robust Contractual Provisions. All employment agreements should include comprehensive confidentiality provisions that clearly define the scope of "Confidential Information." The definition should include, without limitation: proprietary content (including show concepts, pilot scripts, series bibles, and format documents); show formats and production methodologies; audience analytics and viewership data; revenue projections and financial models; talent deal terms and negotiation strategies; distribution agreements and licensing terms; marketing plans and advertising strategies; technology and software systems; and all other information designated as confidential by AMA, whether in written, electronic, or oral form.

2. Annual Acknowledgment. Employees should acknowledge receipt and understanding of AMA's confidentiality obligations upon hire and annually thereafter by signing a written acknowledgment form. The acknowledgment form should reference both the employee's contractual confidentiality obligations and AMA's Acceptable Use and Confidentiality Policy. Annual acknowledgment serves two purposes: it refreshes the employee's awareness of the obligations, and it creates a contemporaneous record of the employee's knowledge and understanding of those obligations.

3. Survival Provisions. All confidentiality provisions should include a clear survival clause providing that the confidentiality obligations survive the termination of the employment relationship, regardless of the reason for termination, for the duration specified in the agreement (or, for trade secrets, for so long as the information qualifies as a trade secret).

D. Narrow Non-Solicitation Clauses

Employee non-solicitation and business/client non-solicitation clauses remain a viable, though legally sensitive, component of AMA's restrictive covenant framework. Unlike non-competition clauses, non-solicitation clauses do not categorically restrain an individual from engaging in a profession or business; rather, they restrict the manner in which the individual may engage with specific persons (employees or clients) of the former employer. However, the enforceability of non-solicitation clauses under California law is subject to ongoing uncertainty, and overly broad non-solicitation provisions risk being characterized as de facto non-competes and struck down under section 16600.

The current state of California law on non-solicitation clauses may be summarized as follows:

1. Employee Non-Solicitation. Employee non-solicitation clauses (such as section 9.2 of the Aldrich Employment Agreement, which prohibited Aldrich from soliciting or recruiting AMA employees for twenty-four months following termination) have generally been upheld by California courts as consistent with section 16600, on the theory that a restriction on soliciting former co-workers does not restrain the individual from engaging in a lawful business. However, this area of law is not settled. In AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, the California Court of Appeal acknowledged the tension between employee non-solicitation clauses and section 16600, and the opinion has been cited by plaintiff-side counsel as authority for challenging such provisions. AMA's employee non-solicitation clauses should be drafted with this uncertainty in mind.

2. Business/Client Non-Solicitation. Business and client non-solicitation clauses (such as section 9.3 of the Aldrich Employment Agreement, which prohibited Aldrich from soliciting or doing business with AMA's clients for twenty-four months following termination) are more vulnerable to challenge. In The Retirement Group v. Galante (2009) 176 Cal.App.4th 1226, the California Court of Appeal struck down a customer non-solicitation provision as an unlawful restraint on trade, reasoning that the provision effectively prevented the former employee from engaging in a lawful business by prohibiting contact with the very clients and contacts that constituted the employee's professional network. Overly broad customer non-solicitation provisions — particularly those with long durations, broad geographic scope, or expansive definitions of "client" — are at significant risk of being characterized as indirect non-competes.

In light of these authorities, we recommend the following approach to non-solicitation clauses in AMA's employment agreements:

1. Duration. Non-solicitation periods should not exceed twelve months following the termination of employment. This is consistent with the modified terms negotiated in the Aldrich settlement, which reduced both the employee non-solicitation clause (section 9.2) and the business non-solicitation clause (section 9.3) from twenty-four months to twelve months. A twelve-month period is generally viewed as reasonable by California courts and is sufficient to protect AMA's legitimate interests in the stability of its workforce and client relationships.

2. Scope — Employees. Employee non-solicitation clauses should be limited to employees with whom the departing individual had material, substantive professional contact during the six months preceding termination. This is a narrower scope than the twelve-month lookback period in the original section 9.2 of the Aldrich Employment Agreement and is designed to ensure that the provision is limited to relationships in which the departing individual could exert meaningful influence, rather than extending to the entire AMA workforce.

3. Scope — Clients/Business Partners. Business non-solicitation clauses should be limited to clients and business partners with whom the departing individual had material, substantive professional contact during the six months preceding termination, and should be further limited to the specific lines of business or projects on which the individual worked. This narrower scope is designed to avoid the Galante problem of effectively prohibiting the individual from engaging in a lawful business.

4. Severability. All restrictive covenant provisions should include a severability clause that expressly authorizes a court to reform any provision found to be overbroad, rather than voiding the provision in its entirety. While California courts are not uniformly receptive to "blue pencil" reformation of restrictive covenants, the inclusion of a severability clause preserves the argument and may persuade a court to narrow an overbroad provision rather than striking it altogether.

E. Data Loss Prevention Program

Finally, AMA should take immediate steps to strengthen its data loss prevention ("DLP") program. While contractual confidentiality protections and trade secret statutes provide legal remedies after a breach has occurred, an effective DLP program is designed to prevent unauthorized transmission of proprietary information in the first instance — or, at a minimum, to detect such transmission promptly so that remedial action can be taken before the damage compounds.

The Aldrich cross-claims underscored both the importance and the limitations of AMA's current DLP practices. The routine email audit that identified Aldrich's unauthorized transmission of 340 emails containing AMA proprietary materials to a personal email account was not initiated until August 2022 — by which time Aldrich had been forwarding materials for approximately nine months. Earlier detection would have limited the scope of the breach and would have provided AMA with additional leverage in the dispute.

We recommend the following specific enhancements to AMA's DLP program:

(a) Automated Alerts for Large-Volume Email Forwarding. AMA should implement automated, real-time alerts that are triggered when any employee forwards a volume of emails to a personal email account that exceeds a defined threshold (e.g., more than ten emails forwarded to a non-AMA email address within a twenty-four-hour period, or more than fifty within a seven-day period). The DLP audit that identified Aldrich's 340 forwarded emails was a routine periodic audit; such monitoring should be continuous and automated, not dependent on the timing and scope of periodic manual reviews.

(b) Restrictions on Personal Cloud Storage. AMA should implement technical restrictions preventing the use of personal cloud storage services — including, without limitation, Larkspur Technologies, Hollowell Health IT, Meridian Systems, Cobalt Ridge Systems (personal), and similar platforms — for the storage or transmission of AMA business materials on AMA-issued devices and on the AMA corporate network. Aldrich used a personal Larkspur Technologies account to transmit pilot sizzle reels to Halcyon Creek Productions LLC, a production company with which Aldrich was negotiating a post-termination engagement. AMA's IT department should implement network-level blocks on uploads to personal cloud storage services from AMA-issued devices, and should monitor for attempts to circumvent these restrictions.

(c) Periodic Audits of Email and File Transfer Activity. AMA should conduct regular audits — no less frequently than quarterly — of email forwarding activity and file transfer history for employees with access to sensitive proprietary information. Priority should be given to senior executives, development personnel, and any employees with access to show format bibles, revenue models, talent deal terms, distribution agreements, and other high-value proprietary materials. Audit results should be reviewed by the designated compliance officer and retained for a minimum of four years.

(d) Employee Training on Data Security. AMA should conduct regular employee training — incorporated into onboarding for new employees and provided as annual refresher training for existing employees — on data security obligations and the consequences of unauthorized data transfers. The training should reference AMA's Acceptable Use and Confidentiality Policy (last revised March 2021) and should specifically address the requirement for prior written authorization from the President of AMA or the Vice President of Business Affairs before any external transmission of development materials, show concepts, format documents, or other proprietary content. The training should clearly communicate that unauthorized data transfers may result in disciplinary action up to and including termination, as well as civil and potentially criminal liability.

(e) Exit Procedures. Upon any employee separation — whether voluntary (resignation) or involuntary (termination) — AMA's IT security team should conduct a comprehensive review of the departing employee's email forwarding activity and file transfer history during the twelve months preceding the date of separation. This review should be initiated immediately upon notice of the employee's impending departure and should be completed before or concurrent with the employee's last day of employment. All AMA-issued devices — including laptops, desktop computers, tablets, mobile phones, and external storage devices — should be collected from the departing employee on or before the last day of employment. All collected devices should be forensically imaged before wiping to preserve evidence in the event that a breach is later identified.

In connection with the exit procedures described above, we note that the Aldrich settlement included a return-of-materials provision requiring Aldrich to return or permanently delete all AMA proprietary materials in Aldrich's possession, custody, or control within ten business days of the execution of the settlement agreement (i.e., by February 2, 2024) and to provide written certification of compliance with the return-of-materials obligation. This type of return-of-materials and certification provision should be a standard term in all of AMA's employment agreements going forward, and should be included in any separation agreement executed in connection with an employee's departure. The provision should require the departing employee to certify, under penalty of perjury, that all company materials have been returned or destroyed and that no copies have been retained.

CONCLUSION

We are prepared to assist AMA in drafting revised meal and rest break policies, revised timekeeping protocols, revised employment agreements, confidentiality acknowledgment forms, non-solicitation provisions, AB 1076/SB 699 notification letters, and supervisory training materials consistent with the recommendations set forth in this letter. We are also available to coordinate with NovaPay Solutions on the TimeTrack Pro system modifications described in Section II.

We note that these recommendations are based on California law as of the date of this letter, February 2024. California employment law — and the law governing restrictive covenants in particular — continues to evolve rapidly. AMA should monitor legislative developments, including any further amendments to Business and Professions Code sections 16600 through 16600.7, any new regulations issued by the California Labor Commissioner, and any significant judicial decisions affecting meal and rest break obligations or restrictive covenant enforceability. AMA should consult with counsel before implementing any material changes to its restrictive covenant practices or wage-and-hour policies.

We are available to discuss any of the foregoing recommendations in further detail at AMA's convenience. Please do not hesitate to reach out to either of the undersigned at any time.

Renata Vasquez — (213) 555-7200 — rvasquez@calderwoodharkness.com

Devon Archer — (213) 555-7238 — darcher@calderwoodharkness.com

Sincerely,

CALDERWOOD & HARKNESS LLP

By: ________

Renata Vasquez Partner

By: ________

Devon Archer Senior Associate

cc: Philippa Cartwright, General Counsel, AGMG (34 Kingsway, London WC2B 6EX, United Kingdom) Bernard Crawford, Partner, Calderwood & Harkness LLP

CALDERWOOD & HARKNESS LLP Attorneys at Law 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201 www.calderwoodharkness.com
February 14, 2024
VIA EMAIL AND FIRST-CLASS MAIL
Mr. Gregory Tanaka Vice President, Legal & Compliance Aurelius Media Americas Inc. 8500 Sunset Boulevard, Suite 1400 West Hollywood, California 90069
Ms. Lorraine Okafor Senior Vice President, Human Resources Aurelius Media Americas Inc. 8500 Sunset Boulevard, Suite 1400 West Hollywood, California 90069
ATTORNEY-CLIENT PRIVILEGED COMMUNICATION — DO NOT FORWARD WITHOUT AUTHORIZATION OF COUNSEL
Re: Post-Settlement Compliance Recommendations — Meal and Rest Break Policy Revisions, Timekeeping System Modifications, and Restrictive Covenant Best Practices
C&H Matter No.: 1017-00004
Dear Mr. Tanaka and Ms. Okafor:
In connection with the resolution of Fuentes v. Aurelius Media Americas Inc., Case No. 22STCV38214, Superior Court of the State of California, County of Los Angeles (Final Approval Order entered February 9, 2024, approving a class-wide settlement of $14,750,000), and the related individual action, Aldrich v. Aurelius Media Americas Inc., Case No. 22STCV41087 (confidential settlement of $2,350,000, dismissed with prejudice on January 29, 2024), Calderwood & Harkness LLP provides the following compliance recommendations designed to mitigate AMA's future litigation risk across the wage-and-hour and restrictive covenant domains implicated by both matters. These recommendations are informed by the discovery record in both cases, the rulings of the Court (Hon. Raymond Escobedo, Dept. 34), the settlement terms, and the current state of California employment law.
We note at the outset that these recommendations are advisory in nature and are not mandated by any court order or settlement provision. Nonetheless, we strongly recommend that AMA implement them promptly. Doing so will serve two important purposes: first, it will demonstrate good faith in the event of any future regulatory inquiry or private litigation; and second, it will materially reduce AMA's exposure to the types of wage-and-hour claims and restrictive covenant disputes that gave rise to the Fuentes and Aldrich matters. The combined cost of those two matters — $17,100,000 in settlement value alone, exclusive of attorneys' fees, expert costs, and the substantial internal resources devoted to discovery and mediation over the course of approximately eighteen months — underscores the imperative of proactive compliance.
Our recommendations are organized into three categories, reflecting the three principal areas of risk identified through this litigation:
I. Meal and Rest Break Policies
II. Timekeeping System Modifications
III. Restrictive Covenant Best Practices
We address each in turn below.
I. MEAL AND REST BREAK POLICIES
The meal and rest break claims constituted the core of the Fuentes class action and accounted for the substantial majority of the class settlement value. While the settlement resolves all released claims for the class period, AMA's ongoing compliance posture in this area will be the single most important factor in determining whether AMA faces similar litigation in the future. The following recommendations address the three principal areas of concern: the written meal period policy, second meal period compliance, and rest period training.
A. Revised Meal Period Policy — Five-Hour Threshold
AMA's written meal period policy must be revised to explicitly reference the five-hour threshold for the first meal period, consistent with IWC Wage Order 12 (8 Cal. Code Regs. § 11120) and California Labor Code section 512. As a company operating in the motion picture industry, AMA's California-based workforce is governed by Wage Order 12, which applies to all of AMA's approximately 2,400 California-based employees across its seven production facilities and fourteen show units.
This revision is necessary to correct a discrepancy that was identified during the course of the Fuentes litigation and that constituted a significant factor in the Court's class certification analysis. Specifically, the NovaPay Solutions TimeTrack Pro system was configured to trigger the automatic thirty-minute meal period deduction at six hours rather than five hours — a configuration error that resulted in employees who worked shifts of between five and six hours being denied meal periods (or, more precisely, having no system-level safeguard ensuring the provision of a meal period). This discrepancy was corrected in December 2022 as part of AMA's remedial efforts during the pendency of the litigation; however, the written policy distributed to employees has not been updated to reflect the corrected system configuration or to state the legal standard with precision.
The revised policy should include the following elements:
1. First Meal Period. All non-exempt employees are entitled to a thirty-minute uninterrupted, duty-free meal period for any shift exceeding five hours of work. The first meal period must commence no later than the end of the employee's fifth hour of work (i.e., before the employee begins the sixth hour). During the meal period, the employee must be relieved of all duties and must be free to leave the premises.
2. Second Meal Period. A second thirty-minute uninterrupted, duty-free meal period is required for any shift exceeding ten hours of work. The second meal period must commence no later than the end of the employee's tenth hour of work (i.e., before the employee begins the eleventh hour).
3. Waiver of First Meal Period. If the total work period for the day will not exceed six hours, the first meal period may be waived by mutual consent of the employer and the employee. Any such waiver must be documented in writing.
4. Waiver of Second Meal Period. If the total work period for the day will not exceed twelve hours, the second meal period may be waived by mutual consent of the employer and the employee, but only if the first meal period was not waived. Any such waiver must be documented in writing.
5. Meal Period Premium. If an employee is not provided a compliant meal period as required by this policy, the employee shall receive one additional hour of pay at the employee's regular rate of compensation for each workday on which a meal period violation occurs, in accordance with California Labor Code section 226.7.
The revised policy should be distributed to all non-exempt employees at all seven California facilities and across all fourteen show units. Each employee should be required to sign a written acknowledgment confirming receipt and understanding of the revised policy. Signed acknowledgments should be retained in each employee's personnel file for a minimum of four years, which covers the applicable statute of limitations period for Labor Code claims (three years under Code of Civil Procedure section 338, or four years if brought as an unfair business practices claim under Business and Professions Code section 17200).
In addition, AMA should audit whether any of its show units currently rely on on-duty meal period agreements. Under Wage Order 12, an on-duty meal period is permissible only where: (a) the nature of the work prevents the employee from being relieved of all duty; (b) the employee has consented to the on-duty meal period in a written agreement; and (c) the written agreement states that the employee may revoke the agreement at any time. If any show units are utilizing on-duty meal period agreements, AMA should review each such agreement to ensure strict compliance with these requirements and should consult with this firm before entering into any new on-duty meal period agreements. The on-duty meal period exception is narrow and is construed strictly by California courts; improper reliance on this exception has been the basis for substantial meal period premium liability in other entertainment industry cases.
B. Second Meal Period Compliance
Second meal period compliance presents a particular challenge for AMA's entertainment industry production operations, where twelve- to sixteen-hour shooting days are common, particularly for field-based and live events show units. Although the Court's August 11, 2023 class certification order denied certification of the second meal period sub-class — finding that second meal period claims were too dependent on the specific production schedules, shooting locations, and operational circumstances of individual show units to be amenable to class-wide resolution — this ruling does not eliminate AMA's exposure. To the contrary, the denial of class certification on this issue means that AMA may face a multiplicity of individual claims, each litigated on its own facts, which can be administratively burdensome and costly to defend even where liability is uncertain.
To address this risk, we recommend the following measures:
1. Mandatory Scheduling Prompt in TimeTrack Pro. AMA should work with NovaPay Solutions to implement a mandatory scheduling prompt in the TimeTrack Pro system that is triggered when an employee's shift approaches the ten-hour mark. The prompt should be delivered to both the employee and the responsible supervisor — typically the Unit Production Manager ("UPM") or Line Producer for production-day operations — alerting them that a second meal period is due. The prompt should be configurable to fire at a designated interval before the end of the tenth hour (we recommend thirty minutes prior, i.e., at the nine-and-a-half-hour mark) to allow sufficient time for scheduling the break.
2. Daily Call Sheet Integration. AMA should require that each daily call sheet for production days include a designated second meal period time for any crew expected to work beyond ten hours. This should be a mandatory field on the call sheet template, and UPMs and Line Producers should be trained that the omission of a second meal period from the call sheet for a crew scheduled to work beyond ten hours is a compliance violation.
3. Particular Attention to High-Risk Show Units. Certain show units present elevated risk due to the logistical challenges of their production environments. Field-based show units — including, for example, "Summit Challenge," which is coordinated from AMA's Burbank facility at 3800 W. Alameda Avenue, Burbank, California 91505 — frequently involve remote shooting locations where the provision of uninterrupted, duty-free meal periods is logistically difficult. Similarly, live events operations, where production schedules are driven by real-time event timing, present comparable challenges. AMA should develop show-unit-specific meal period protocols for these high-risk operations, taking into account the unique scheduling and logistical constraints of each unit, and should designate a compliance point person within each such unit who is responsible for ensuring that second meal periods are scheduled and provided.
C. Rest Period Training
AMA should institute annual mandatory training for all supervisory personnel — including Unit Production Managers, Line Producers, department heads, and any other individuals with authority to direct the work of non-exempt employees — on California rest period requirements. While the Court's August 11, 2023 certification order denied class certification of the rest period sub-class, finding no systemic evidence of a policy or practice of denying rest periods, the fourteen formal complaints received by AMA's Human Resources department during the class period (2019–2022) relating to meal and rest break issues indicate that rest period compliance is an area warranting proactive attention.
The training should cover the following topics:
1. Entitlement. Non-exempt employees are entitled to a net ten-minute paid rest period for every four hours worked, or major fraction thereof. The phrase "major fraction thereof" means any period exceeding two hours. Accordingly, an employee working a shift of three and one-half to eight hours is entitled to one rest period; an employee working a shift of more than six hours and up to ten hours is entitled to two rest periods; and an employee working a shift of more than ten hours is entitled to three rest periods.
2. Timing. Rest periods should, insofar as practicable, be scheduled in the middle of each four-hour work period. While exact mid-point scheduling is not always feasible in a production environment, supervisors should make good-faith efforts to provide rest periods at or near the midpoint and should not routinely schedule rest periods at the very beginning or end of a work period.
3. Duty-Free. Rest periods must be duty-free. During a rest period, the employee must be relieved of all work duties and must be free from employer control. Supervisors may not require employees to remain "on call" or "on standby" during rest periods, carry radios or communication devices in a manner that effectively prevents the employee from resting, or perform any work tasks.
4. Production Culture. The training should directly address the production-day culture prevalent in the entertainment industry, in which stopping production for breaks may be perceived as disruptive to filming schedules, costly, or impractical. Supervisors must understand that, regardless of production pressures, the legal obligation to authorize and permit rest periods is non-negotiable. Production schedules must be designed to accommodate legally mandated rest periods, not the other way around.
5. Premium Pay. If an employee is not authorized and permitted to take a compliant rest period, the employee is entitled to one additional hour of pay at the employee's regular rate of compensation for each workday on which a rest period violation occurs, pursuant to California Labor Code section 226.7.
Because rest periods are paid time, they are not tracked in the TimeTrack Pro system, which is consistent with industry practice and legal requirements (employers may not require employees to remain on the premises during rest periods, and tracking rest periods through a time clock system could be construed as a form of employer control). As a result, supervisory compliance is the primary safeguard against rest period violations, which makes the training of supervisors particularly critical.
AMA should document training attendance — including the name, title, and facility or show unit of each attendee — and retain copies of all training materials. These records should be maintained for a minimum of four years, consistent with the statute of limitations considerations discussed above. We recommend that the first training cycle be completed no later than June 30, 2024, with annual refresher training thereafter.
II. TIMEKEEPING SYSTEM MODIFICATIONS
The configuration and operation of the NovaPay Solutions TimeTrack Pro timekeeping system was the central factual issue in the Fuentes litigation. The automatic meal period deduction — and, critically, the inconsistent activation of the Missed Meal Attestation feature across AMA's California facilities — was the primary vulnerability that drove the Court's class certification order and, ultimately, the settlement. The following recommendations are designed to address the systemic weaknesses identified in the litigation and to position AMA's timekeeping practices to withstand scrutiny in any future proceeding.
A. Elimination of Auto-Deduction — Transition to Affirmative Meal-Period Acknowledgment System
We strongly recommend that AMA discontinue the automatic thirty-minute meal period deduction currently applied in the TimeTrack Pro system and transition to an affirmative meal-period acknowledgment system.
Under the current system — even as corrected in December 2022 — the TimeTrack Pro system automatically deducts thirty minutes from the employee's recorded work time for shifts exceeding five hours, on the assumption that the employee received a compliant meal period. The system includes a Missed Meal Attestation feature that allows employees to override the automatic deduction by affirmatively reporting that they did not receive a compliant meal period. However, as the Fuentes litigation demonstrated, this override mechanism was not consistently available or effectively communicated to employees.
The proposed affirmative meal-period acknowledgment system would operate differently. Rather than assuming that a meal period was taken and requiring the employee to affirmatively report a violation, the system would require the employee to affirmatively confirm, at the end of each qualifying shift, that a compliant, uninterrupted thirty-minute meal period was received. This confirmation would be made by selecting an option on the time clock terminal (e.g., a prompt reading: "Did you receive an uninterrupted 30-minute meal period today? Select YES or NO"). If the employee selects "NO" or fails to respond to the prompt before the end of the pay period, the system would automatically flag the shift for supervisory review and, if no documented waiver or other lawful basis for the absence of a meal period is identified, would automatically trigger a one-hour meal period premium payment in the next pay cycle.
The rationale for this transition is both legal and practical:
1. Auto-Deduction Policies Are Disfavored. Automatic meal period deduction policies are disfavored by California courts and are a primary target of plaintiff-side wage-and-hour counsel. Even where an auto-deduction system includes an attestation or override feature, the auto-deduction creates a presumption that operates against the employer: the employer is effectively assuming compliance and placing the burden on the employee to report a violation. In a litigation posture, this framework is difficult to defend, because it requires the employer to prove that employees were aware of the override mechanism, understood how to use it, and were not discouraged from using it — all of which are fact-intensive inquiries that favor class certification and plaintiff-favorable outcomes.
2. The *Fuentes* Litigation Record. The core finding that drove the class certification order and the settlement in Fuentes was the combination of the auto-deduction and the inconsistent activation of the Missed Meal Attestation feature. Specifically, the Missed Meal Attestation feature was deactivated at three of AMA's seven California facilities — Facility 2 (Studio City, 4024 Penmark Strategy Partners Avenue, Studio City, CA 91604), Facility 4 (Burbank, 3800 W. Alameda Avenue, Burbank, CA 91505), and Facility 7 (El Segundo, 888 N. Sepulveda Boulevard, El Segundo, CA 90245) — for the period from March 2019 through December 2022. At the four facilities where the feature was active during that period, usage rates ranged from 2.1% to 4.1% of qualifying shifts. The Court (Hon. Raymond Escobedo, Dept. 34) found that these low attestation usage rates "raise serious questions about whether the feature was effectively communicated to employees" and observed that "a mechanism that employees do not know about is functionally equivalent to no mechanism at all." These findings were central to the Court's conclusion that common questions of law and fact predominated over individual issues, warranting class certification of the meal period claims.
3. Shifting the Burden. An affirmative acknowledgment system fundamentally shifts the evidentiary framework. Rather than the employer assuming compliance and relying on employee-initiated override, the employee affirmatively confirms compliance at the end of each shift. This creates an affirmative record — a contemporaneous, shift-by-shift attestation — that the employer can rely upon in the event of a subsequent claim. If an employee confirms receipt of a compliant meal period at the end of each shift and later claims that meal periods were not provided, the employer has a strong evidentiary basis for rebuttal. Conversely, if an employee reports a missed meal period, the system triggers an automatic review and premium payment, demonstrating the employer's good faith and responsiveness.
We recommend that AMA coordinate this transition with NovaPay Solutions. The appropriate point of contact at NovaPay is Marcus Yee, Director of Client Data Services, located at 2200 Powell Street, Suite 600, Emeryville, California 94608. NovaPay should be engaged to configure the new affirmative acknowledgment system within the TimeTrack Pro platform, develop user-facing prompt language, and provide training materials for both administrators and end users. We anticipate that the transition can be completed within sixty to ninety days of engagement. During the transition period, the existing system should continue to operate with the Missed Meal Attestation feature fully activated at all facilities, as discussed in Section II.B below.
B. Missed Meal Attestation Feature — Universal Activation and Ongoing Monitoring
To the extent that AMA retains any version of the automatic meal period deduction during the transition period described above, the Missed Meal Attestation feature must remain activated at all seven California facilities at all times, without exception. The deactivation of this feature at three facilities for a period of nearly four years was the single most damaging fact in the Fuentes litigation and must not be permitted to recur.
Beyond ensuring universal activation, AMA should implement the following ongoing monitoring and compliance measures:
1. Quarterly Audits. AMA should conduct quarterly audits to confirm the continued activation of the Missed Meal Attestation feature at all seven facilities. These audits should include a review of system configuration settings, verification that the feature is functioning as intended on all time clock terminals, and a review of attestation usage data for the preceding quarter. Audit results should be documented and retained.
2. Designated Compliance Officer. AMA should designate a specific individual as the compliance officer responsible for monitoring attestation data and ensuring the continued functioning of the feature. We recommend assigning this responsibility to Karen Fong, Payroll Manager, or, if resources permit, creating a dedicated HR compliance role with this as a core function. The designated compliance officer should receive direct reports from NovaPay Solutions regarding any system configuration changes, updates, or outages affecting the attestation feature.
3. Investigation of Anomalous Data. The designated compliance officer should investigate any facility or show unit exhibiting attestation rates that are either abnormally low or abnormally high. Abnormally low attestation rates (substantially below the expected range given historical data) may indicate that employees at that facility are unaware of the attestation feature or are being discouraged — explicitly or implicitly — from using it. Abnormally high attestation rates may indicate systemic meal period violations at the facility, which would warrant a separate investigation and corrective action. In either case, the investigation should be documented and any corrective measures should be implemented promptly.
4. Formal Training on the Attestation Feature. Formal training on the existence, purpose, and operation of the Missed Meal Attestation feature should be incorporated into the onboarding process for all new non-exempt employees and into annual refresher training for all existing non-exempt employees. The absence of formal training materials specifically addressing the attestation feature was identified as a significant gap during the Fuentes litigation. Ms. Okafor testified during her deposition that AMA did not conduct formal training regarding the attestation feature and that employee awareness of the feature was dependent on informal communications from supervisors — a practice that is plainly insufficient to ensure universal awareness and that contributed directly to the low usage rates cited by the Court in its certification order. All training should be documented, including the names and positions of attendees, the date and location of training, and the training materials used.
C. Pre-Shift and Post-Shift Time Recording
AMA should instruct all non-exempt employees to clock in at the time they begin performing any work-related tasks and to clock out only after all post-shift tasks have been completed. This instruction should be communicated both in the revised timekeeping policy and in supervisory training.
Work-related tasks that require clock-in include, but are not limited to: pre-shift setup activities such as setting up equipment, logging in to editing systems, powering up and configuring workstations, attending pre-production briefings, and reviewing call sheets or production notes. Post-shift tasks that must be completed before clock-out include: post-production wrap activities, logging footage, completing continuity reports, securing equipment, and attending post-production debriefings.
Supervisors should be trained to ensure that official call times align with expected clock-in times. If pre-call-time work is anticipated or expected — for example, if a camera operator is expected to arrive early to set up equipment before the official call time — the call time should be adjusted to reflect the actual time at which work is expected to begin, and the employee should be instructed to clock in at that earlier time. The practice of setting a call time that is later than the time at which work is actually expected to commence is a common source of off-the-clock work claims in the entertainment industry and should be eliminated.
While the Court denied class certification of the off-the-clock claims in the Fuentes action — finding that such claims were inherently individualized, dependent on the specific circumstances of each employee's work and the practices of each supervisor and show unit — the underlying conduct, if it is occurring, remains a violation of California Labor Code sections 510 and 1194, and remains actionable on an individual basis.
AMA's production protocols should be revised to include an explicit statement that no non-exempt employee is expected or permitted to perform work-related tasks before clocking in or after clocking out. This statement should be included in the daily call sheet template and should be reinforced through supervisory training. Any supervisor who directs or knowingly permits off-the-clock work — whether by explicit instruction, implicit expectation, or acquiescence — should be subject to progressive disciplinary action, up to and including termination.
III. RESTRICTIVE COVENANT BEST PRACTICES
The Aldrich matter highlighted the significant risks associated with AMA's current restrictive covenant practices, particularly the inclusion of non-competition clauses in employment agreements with California-based employees. The following recommendations are designed to bring AMA's restrictive covenant practices into compliance with current California law, to minimize litigation risk, and to ensure that AMA retains effective contractual protections for its legitimate business interests — specifically, the protection of confidential information and the prevention of unfair solicitation.
A. Elimination of Non-Competition Clauses for California-Based Employees
AMA should immediately remove non-competition clauses from all employment agreements with California-based employees. Non-competition clauses are void and unenforceable in California, and any attempt to enforce them — or even to include them in employment agreements — exposes AMA to significant legal and financial risk.
The legal framework is clear and well-established:
1. California Business and Professions Code Section 16600. Section 16600 provides, in relevant part, that "every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void." This prohibition is broad and is not subject to a "reasonableness" analysis; unlike many other states, California does not recognize an exception for non-compete agreements that are "reasonable" in scope, duration, or geographic reach.
2. Edwards v. Kraft Quill CPAs LLP. The California Supreme Court confirmed the breadth of section 16600 in Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, holding that section 16600 invalidates non-competition agreements except for the narrow statutory exceptions set forth in sections 16601 through 16602.5 (which apply to the sale of a business, the dissolution of a partnership, and the dissolution or sale of a limited liability company — none of which are applicable to employment agreements).
3. AB 1076 (Cal. Bus. & Prof. Code § 16600.5). Effective January 1, 2024, AB 1076 codified as section 16600.5 expressly prohibits employers from entering into or attempting to enforce any noncompete clause or noncompete agreement with an employee or prospective employee, regardless of where the agreement was signed or where the employer is headquartered. Section 16600.5 further provides that any such clause or agreement is void, regardless of whether the contract was signed and the employment was maintained outside of California.
4. SB 699 (Cal. Bus. & Prof. Code § 16600.7). Also effective January 1, 2024, SB 699, codified as section 16600.7, makes it unlawful for an employer to enter into or attempt to enforce a noncompete agreement "regardless of whether the contract was signed and the employment was maintained outside of California." This provision extends the reach of section 16600 to agreements executed in other states or countries and is specifically designed to prevent employers from using choice-of-law provisions to circumvent California's prohibition on non-competes.
The Aldrich matter provided a concrete and costly illustration of the futility and risk of attempting to rely on non-competition clauses for California-based employees. The Aldrich Employment Agreement contained, at section 9.1, an eighteen-month post-termination non-competition clause that purported to prohibit Aldrich from engaging in any business competitive with AMA's entertainment production and media operations anywhere in the United States. The Employment Agreement also contained, at section 14.3, a New York choice-of-law clause that AMA initially hoped would save the non-compete from invalidation under section 16600.
Both provisions proved unenforceable. The non-competition clause at section 9.1 was voided by mutual agreement in the Aldrich settlement, consistent with section 16600. As to the choice-of-law clause, AMA's litigation team concluded — and we concurred — that a California court would not have enforced the New York choice-of-law provision to save the non-compete, because under the Restatement (Second) of Conflict of Laws section 187(2), a choice-of-law provision will not be enforced if the chosen state's law is contrary to a fundamental policy of the state whose law would otherwise govern and that state has a materially greater interest in the determination of the particular issue. California's prohibition on non-competition agreements is a fundamental public policy, and California — as both the state of Aldrich's employment and the state where AMA's operations are principally conducted — had a materially greater interest in the enforceability of the non-compete than New York.
AMA should conduct a comprehensive audit of all existing employment agreements with California-based employees and senior executives — including agreements that may have been executed under the oversight of AGMG's global legal team in London or other jurisdictions — to identify any agreements containing non-competition clauses. All such clauses should be removed by amendment or, where the agreement is being renewed or replaced, should be omitted from the successor agreement. This audit should cover not only current employees but also any former employees who may still be subject to post-termination non-competition obligations under their prior agreements, as any attempt to enforce such obligations would violate sections 16600, 16600.5, and 16600.7.
B. Notification Requirement Under AB 1076 and SB 699
Effective January 1, 2024, California Business and Professions Code section 16600.5(b) requires employers to notify current and former employees who were employed after January 1, 2022, in individualized written communication, that any non-compete clause or non-compete agreement that the employer has entered into with the employee is void.
AMA should send this notification to all affected employees no later than thirty days from the date of this letter — that is, by March 15, 2024. We emphasize the following requirements and best practices for this notification:
1. Individualized Communication. The notification must be sent by individualized written communication. A general mass email or a posting on an internal company bulletin board or intranet is not sufficient to satisfy the statutory requirement. We recommend that the notification take the form of a personalized letter or email addressed to each affected individual by name, referencing the specific employment agreement (by title and date) and the specific provision (by section number) that is being identified as void.
2. Scope of Affected Employees. The notification obligation extends to both current and former employees who were employed after January 1, 2022, and whose employment agreements contain non-compete clauses. AMA should cross-reference the results of the audit described in Section III.A above to identify the full universe of affected individuals.
3. Retention of Records. AMA should retain copies of all notifications sent, together with proof of delivery (e.g., email delivery receipts, certified mail return receipts, or electronic acknowledgment of receipt), for a minimum of four years. These records will be necessary to demonstrate compliance in the event of any regulatory inquiry or private litigation.
4. Consequences of Non-Compliance. Failure to provide the required notification may expose AMA to claims under section 16600.5(b), which provides for injunctive relief and an award of attorney's fees to the prevailing employee. Given the relatively low cost of compliance — drafting and sending individualized letters — and the significant potential exposure for non-compliance, prompt action is warranted.
We are prepared to assist AMA in drafting the notification letter and identifying the universe of affected current and former employees if requested.
C. Retain and Strengthen Confidentiality Protections
While non-competition clauses are unenforceable in California, confidentiality provisions remain fully enforceable and are AMA's most effective contractual tool for protecting its proprietary information and trade secrets. Unlike non-compete clauses, confidentiality obligations do not restrain an employee from engaging in a lawful profession, trade, or business; rather, they restrain the unauthorized disclosure and use of specific trade secrets and confidential information belonging to the employer. California courts have consistently upheld properly drafted confidentiality provisions as consistent with section 16600.
In addition to contractual confidentiality protections, AMA has independent statutory protection under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code section 3426 et seq., which provides remedies — including injunctive relief, compensatory damages, and exemplary damages for willful and malicious misappropriation — for the misappropriation of trade secrets, regardless of whether the parties have entered into a confidentiality agreement.
The Aldrich matter demonstrated the practical value of strong confidentiality protections. While AMA's non-competition clause (section 9.1 of the Aldrich Employment Agreement) was unenforceable, AMA's confidentiality provision (section 9.4) provided a fully enforceable contractual basis for AMA's cross-claims. AMA's cross-claims for breach of section 9.4 and for misappropriation of trade secrets under CUTSA provided significant leverage in the settlement negotiations and were a material factor in achieving the settlement terms, which included the continuation of Aldrich's confidentiality obligations under section 9.4 in full force and in perpetuity. The enforceability and strength of the confidentiality provisions offset, in substantial part, the loss of the non-compete as a contractual tool.
We recommend the following measures to strengthen AMA's confidentiality protections:
1. Robust Contractual Provisions. All employment agreements should include comprehensive confidentiality provisions that clearly define the scope of "Confidential Information." The definition should include, without limitation: proprietary content (including show concepts, pilot scripts, series bibles, and format documents); show formats and production methodologies; audience analytics and viewership data; revenue projections and financial models; talent deal terms and negotiation strategies; distribution agreements and licensing terms; marketing plans and advertising strategies; technology and software systems; and all other information designated as confidential by AMA, whether in written, electronic, or oral form.
2. Annual Acknowledgment. Employees should acknowledge receipt and understanding of AMA's confidentiality obligations upon hire and annually thereafter by signing a written acknowledgment form. The acknowledgment form should reference both the employee's contractual confidentiality obligations and AMA's Acceptable Use and Confidentiality Policy. Annual acknowledgment serves two purposes: it refreshes the employee's awareness of the obligations, and it creates a contemporaneous record of the employee's knowledge and understanding of those obligations.
3. Survival Provisions. All confidentiality provisions should include a clear survival clause providing that the confidentiality obligations survive the termination of the employment relationship, regardless of the reason for termination, for the duration specified in the agreement (or, for trade secrets, for so long as the information qualifies as a trade secret).
D. Narrow Non-Solicitation Clauses
Employee non-solicitation and business/client non-solicitation clauses remain a viable, though legally sensitive, component of AMA's restrictive covenant framework. Unlike non-competition clauses, non-solicitation clauses do not categorically restrain an individual from engaging in a profession or business; rather, they restrict the manner in which the individual may engage with specific persons (employees or clients) of the former employer. However, the enforceability of non-solicitation clauses under California law is subject to ongoing uncertainty, and overly broad non-solicitation provisions risk being characterized as de facto non-competes and struck down under section 16600.
The current state of California law on non-solicitation clauses may be summarized as follows:
1. Employee Non-Solicitation. Employee non-solicitation clauses (such as section 9.2 of the Aldrich Employment Agreement, which prohibited Aldrich from soliciting or recruiting AMA employees for twenty-four months following termination) have generally been upheld by California courts as consistent with section 16600, on the theory that a restriction on soliciting former co-workers does not restrain the individual from engaging in a lawful business. However, this area of law is not settled. In AMN Healthcare, Inc. v. Aya Healthcare Services, Inc. (2018) 28 Cal.App.5th 923, the California Court of Appeal acknowledged the tension between employee non-solicitation clauses and section 16600, and the opinion has been cited by plaintiff-side counsel as authority for challenging such provisions. AMA's employee non-solicitation clauses should be drafted with this uncertainty in mind.
2. Business/Client Non-Solicitation. Business and client non-solicitation clauses (such as section 9.3 of the Aldrich Employment Agreement, which prohibited Aldrich from soliciting or doing business with AMA's clients for twenty-four months following termination) are more vulnerable to challenge. In The Retirement Group v. Galante (2009) 176 Cal.App.4th 1226, the California Court of Appeal struck down a customer non-solicitation provision as an unlawful restraint on trade, reasoning that the provision effectively prevented the former employee from engaging in a lawful business by prohibiting contact with the very clients and contacts that constituted the employee's professional network. Overly broad customer non-solicitation provisions — particularly those with long durations, broad geographic scope, or expansive definitions of "client" — are at significant risk of being characterized as indirect non-competes.
In light of these authorities, we recommend the following approach to non-solicitation clauses in AMA's employment agreements:
1. Duration. Non-solicitation periods should not exceed twelve months following the termination of employment. This is consistent with the modified terms negotiated in the Aldrich settlement, which reduced both the employee non-solicitation clause (section 9.2) and the business non-solicitation clause (section 9.3) from twenty-four months to twelve months. A twelve-month period is generally viewed as reasonable by California courts and is sufficient to protect AMA's legitimate interests in the stability of its workforce and client relationships.
2. Scope — Employees. Employee non-solicitation clauses should be limited to employees with whom the departing individual had material, substantive professional contact during the six months preceding termination. This is a narrower scope than the twelve-month lookback period in the original section 9.2 of the Aldrich Employment Agreement and is designed to ensure that the provision is limited to relationships in which the departing individual could exert meaningful influence, rather than extending to the entire AMA workforce.
3. Scope — Clients/Business Partners. Business non-solicitation clauses should be limited to clients and business partners with whom the departing individual had material, substantive professional contact during the six months preceding termination, and should be further limited to the specific lines of business or projects on which the individual worked. This narrower scope is designed to avoid the Galante problem of effectively prohibiting the individual from engaging in a lawful business.
4. Severability. All restrictive covenant provisions should include a severability clause that expressly authorizes a court to reform any provision found to be overbroad, rather than voiding the provision in its entirety. While California courts are not uniformly receptive to "blue pencil" reformation of restrictive covenants, the inclusion of a severability clause preserves the argument and may persuade a court to narrow an overbroad provision rather than striking it altogether.
E. Data Loss Prevention Program
Finally, AMA should take immediate steps to strengthen its data loss prevention ("DLP") program. While contractual confidentiality protections and trade secret statutes provide legal remedies after a breach has occurred, an effective DLP program is designed to prevent unauthorized transmission of proprietary information in the first instance — or, at a minimum, to detect such transmission promptly so that remedial action can be taken before the damage compounds.
The Aldrich cross-claims underscored both the importance and the limitations of AMA's current DLP practices. The routine email audit that identified Aldrich's unauthorized transmission of 340 emails containing AMA proprietary materials to a personal email account was not initiated until August 2022 — by which time Aldrich had been forwarding materials for approximately nine months. Earlier detection would have limited the scope of the breach and would have provided AMA with additional leverage in the dispute.
We recommend the following specific enhancements to AMA's DLP program:
(a) Automated Alerts for Large-Volume Email Forwarding. AMA should implement automated, real-time alerts that are triggered when any employee forwards a volume of emails to a personal email account that exceeds a defined threshold (e.g., more than ten emails forwarded to a non-AMA email address within a twenty-four-hour period, or more than fifty within a seven-day period). The DLP audit that identified Aldrich's 340 forwarded emails was a routine periodic audit; such monitoring should be continuous and automated, not dependent on the timing and scope of periodic manual reviews.
(b) Restrictions on Personal Cloud Storage. AMA should implement technical restrictions preventing the use of personal cloud storage services — including, without limitation, Larkspur Technologies, Hollowell Health IT, Meridian Systems, Cobalt Ridge Systems (personal), and similar platforms — for the storage or transmission of AMA business materials on AMA-issued devices and on the AMA corporate network. Aldrich used a personal Larkspur Technologies account to transmit pilot sizzle reels to Halcyon Creek Productions LLC, a production company with which Aldrich was negotiating a post-termination engagement. AMA's IT department should implement network-level blocks on uploads to personal cloud storage services from AMA-issued devices, and should monitor for attempts to circumvent these restrictions.
(c) Periodic Audits of Email and File Transfer Activity. AMA should conduct regular audits — no less frequently than quarterly — of email forwarding activity and file transfer history for employees with access to sensitive proprietary information. Priority should be given to senior executives, development personnel, and any employees with access to show format bibles, revenue models, talent deal terms, distribution agreements, and other high-value proprietary materials. Audit results should be reviewed by the designated compliance officer and retained for a minimum of four years.
(d) Employee Training on Data Security. AMA should conduct regular employee training — incorporated into onboarding for new employees and provided as annual refresher training for existing employees — on data security obligations and the consequences of unauthorized data transfers. The training should reference AMA's Acceptable Use and Confidentiality Policy (last revised March 2021) and should specifically address the requirement for prior written authorization from the President of AMA or the Vice President of Business Affairs before any external transmission of development materials, show concepts, format documents, or other proprietary content. The training should clearly communicate that unauthorized data transfers may result in disciplinary action up to and including termination, as well as civil and potentially criminal liability.
(e) Exit Procedures. Upon any employee separation — whether voluntary (resignation) or involuntary (termination) — AMA's IT security team should conduct a comprehensive review of the departing employee's email forwarding activity and file transfer history during the twelve months preceding the date of separation. This review should be initiated immediately upon notice of the employee's impending departure and should be completed before or concurrent with the employee's last day of employment. All AMA-issued devices — including laptops, desktop computers, tablets, mobile phones, and external storage devices — should be collected from the departing employee on or before the last day of employment. All collected devices should be forensically imaged before wiping to preserve evidence in the event that a breach is later identified.
In connection with the exit procedures described above, we note that the Aldrich settlement included a return-of-materials provision requiring Aldrich to return or permanently delete all AMA proprietary materials in Aldrich's possession, custody, or control within ten business days of the execution of the settlement agreement (i.e., by February 2, 2024) and to provide written certification of compliance with the return-of-materials obligation. This type of return-of-materials and certification provision should be a standard term in all of AMA's employment agreements going forward, and should be included in any separation agreement executed in connection with an employee's departure. The provision should require the departing employee to certify, under penalty of perjury, that all company materials have been returned or destroyed and that no copies have been retained.
CONCLUSION
We are prepared to assist AMA in drafting revised meal and rest break policies, revised timekeeping protocols, revised employment agreements, confidentiality acknowledgment forms, non-solicitation provisions, AB 1076/SB 699 notification letters, and supervisory training materials consistent with the recommendations set forth in this letter. We are also available to coordinate with NovaPay Solutions on the TimeTrack Pro system modifications described in Section II.
We note that these recommendations are based on California law as of the date of this letter, February 2024. California employment law — and the law governing restrictive covenants in particular — continues to evolve rapidly. AMA should monitor legislative developments, including any further amendments to Business and Professions Code sections 16600 through 16600.7, any new regulations issued by the California Labor Commissioner, and any significant judicial decisions affecting meal and rest break obligations or restrictive covenant enforceability. AMA should consult with counsel before implementing any material changes to its restrictive covenant practices or wage-and-hour policies.
We are available to discuss any of the foregoing recommendations in further detail at AMA's convenience. Please do not hesitate to reach out to either of the undersigned at any time.
Renata Vasquez — (213) 555-7200 — rvasquez@calderwoodharkness.com
Devon Archer — (213) 555-7238 — darcher@calderwoodharkness.com
Sincerely,
CALDERWOOD & HARKNESS LLP
By: ________
Renata Vasquez Partner
By: ________
Devon Archer Senior Associate
cc: Philippa Cartwright, General Counsel, AGMG (34 Kingsway, London WC2B 6EX, United Kingdom) Bernard Crawford, Partner, Calderwood & Harkness LLP

VIA EMAIL AND FIRST-CLASS MAIL

I. MEAL AND REST BREAK POLICIES

II. TIMEKEEPING SYSTEM MODIFICATIONS

III. RESTRICTIVE COVENANT BEST PRACTICES

CONCLUSION

CALDERWOOD & HARKNESS LLP

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