H-1B Non-immigrant Employees are Entitled to "Bench Pay" when non-productive status due to Employer decision

by Michael Papuc

Attorney at Law

44 Montgomery Street, Suite 2405

San Francisco, California 94104

415-773-1755

Michael.Papuc@gmail.com



San Francisco Attorney Michael Papuc represents employees in California who have been penalized for leaving their job for a competitor of their former employer. Many of his clients are H-1B non-immigrant employees who have been penalized by former employers for moving to another job. Attorney Michael Papuc has handled cases of employers’ failure to pay the H-1B "bench pay," when the H-1B is in non-productive status due to decision of the employer or failure of the employer to place the H-1B with an on-site client.

Under Federal law, 20 C.F.R. 655.731(c)(7), when an employer brings into the United States an H-1B non-immigrant employee from another country, and has no work for the H-1B, the H-1B non-immigrant employee is entitled to receive his entire wage, calculated as the prevailing wage the employer submits to the Department of Labor. This is commonly known as "bench pay."

There are many "body shops" which bring into the United States computer programers and engineers under H-1B status. The body shops often have company apartments (temporary housing) ready for the H-1Bs, where there may be as many as 5 to 10 people living in a two bedroom apartment until work is found for the H-1B. The employer will then contract out the H-1B to an end client where the H-1B will ultimately work on site. Under 20 C.F.R. 655.731(c)(7), the employer is responsible to pay the H-1B his or her entire wage during all down time periods, not due to fault of the H-1B, including "decision by the employer (e.g., because of lack of assigned work), lack of a permit or license, ...."

A claim for non-payment of wages may be brought to the Department of Labor or in a formal court action. These cases often lend themselves to class action status. However, fear of the H-1Bs of being black-listed by their employers and not being able to find work in the U.S. typically prevents any such action from taking place.

Limitations on Forced Flood Insurance Coverage by Mortgage Holders in California

Michael Papuc
Attorney at Law
44 Montgomery Street
Suite 2405
San Francisco, California 94104
415-773-1755
Fax: 415-723-9703

email:  Michael.Papuc@gmail.com

San Francisco attorney Michael Papuc represents policy holders in lawsuits against their insurance companies for bad faith claims handling.

Many homeowners in California who live near flood zones are faced with prospect of having to purchase flood insurance when the flood maps are re-drawn to place their homes within the flood districts. When this occurs, the mortgage holder typically has a clause in the deed of trust which allows the mortgage holder to require the homeowner to purchase flood insurance.

The National Flood Insurance Program, through private insurers, offers insurance policies for buildings, for contents, and for combined coverage for both structural damage to buildings and loss of contents. A residential building only policy covers up to a maximum of $250,000, while a contents only policy covers up to a maximum of $100,000. The combined coverage policy covers the building up to $250,000 and the contents up to $100,000.


Under California law, the mortgage holder can require the homeowner to purchase insurance to cover the building only up to the amount of debt on the property. "(T)he beneficiary of the deed of trust only has an interest in insurance proceeds ... when his security is impaired. Even then, his interest extends only to the extent of the impairment." (Kreshek v. Sperling (1984) 157 CA3d 279, 282; Washington Mut. Bank v. Jacoby (2009) 180 CA4th 639, 646.) "A mortgagee’s insurable interest under an insurance policy is limited to the amount of the debt." (Washington Mut. Bank v. Jacoby (2009) 180 Cal.App.4th 639, 646-647; Altus Bank v. State Farm Fire & Cas. Co. (C.D. Cal. 1991) 758 F.Supp. 567, 571.)

Thus, if the amount of the outstanding debt on the property is only $100,000, the lender cannot require the homeowner to purchase the maximum amount of insurance of $250,000 allowable under the National Flood Insurance Program. The maximum amount of flood insurance the lender can require the homeowner to purchase in California is the amount of the debt.

When lenders force coverage on a homeowner who is newly placed in a flood zone due to re-mapping, the language of the insurance policy the lender purchases will limit the lender’s recovery to the lender’s insurable interest in the property, which is the amount of debt on the property. This language will be found under the insurance policy’s "Conditions."

Homeowners in flood zones are free to purchase whatever amount of flood insurance they feel comfortable with. However, they are not required under California law to purchase more than the amount of the remaining debt on the mortgage on the property.

Non-Competition clauses in California Employment Agreements

by Michael Papuc
Attorney at Law
44 Montgomery Street, Suite 2405
San Francisco, California 94104
415-773-1755
Michael.Papuc@gmail.com

San Francisco Attorney Michael Papuc represents employees in California who have been penalized for leaving their job for a competitor of their former employer. Many of his clients are H-1B non-immigrant employees who have been penalized by former employers for moving to another job. The non-competition provisions are void and unenforceable, unless (1) necessary to protect trade secrets of the former employer, (2) part of an agreement for the sale of good will of a business, or (3) part of an agreement for dissolution of a partnership.

Business & Professions Code, sec. 16600, states:

"Except as provided in this chapter, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void."

In Muggill v. Reuben H. Donnelley Corp., 62 Cal.2d 239, 242-243 (1965), the California Supreme Court held that non-compete clauses in employment contracts are void, unless they are necessary to protect an employer’s trade secrets. The Muggill Court said:

"With certain exceptions not relevant here, section 16600 of the Business & Professions Code . . . invalidates provisions in employment contracts prohibiting employees from working for a competitor after completion of his employment or imposing a penalty if he does so [citations], unless they are necessary to protect the employer’s trade secrets [citations]. . . . . [I]n this case, the provision forfeiting plaintiff’s pension rights if he works for a competitor restrains him from engaging in lawful business and is therefore void." (Id. at 242-243; emphasis added.)

The "certain exceptions" to Section 16600, are set forth in sections 16601 and 16602. There are no other exceptions to Section 16600. That was made clear in by the appellate court in Kolani v. Gulska (1998) 64 Cal.App.4th 402, 406, which stated:

"Business and Professions Code sections 16601 and 16602 permit broad covenants not to compete in two narrow situations: where a person sells the goodwill of a business, and where a partner agrees not to compete in anticipation of dissolution of a partnership. The latter sections reinforce the conclusion that covenants not to compete in contracts other than for sale of good will or dissolution of partnership are void." (Emphasis added.)
Thus, by statute, covenants not to compete are permissible when a person sells the goodwill of a business, and where a partner agrees not to compete in anticipation of dissolution of a partnership. By case law, covenants not to compete are permissible to protect trade secrets of an employer. There are no other exceptions.

Homeowner Insurance Companies may require Insured to submit to Examination Under Oath as Condition to Payment of Claim

by Michael Papuc
Attorney at Law
44 Montgomery St., Suite 2405
San Francisco, CA 94104
415-773-1755
Michael.Papuc@gmail.com


San Francisco Attorney Michael Papuc has been practicing Insurance litigation in California since 1987. Attorney Michael Papuc represents policy holders ("insureds") in lawsuits against their insurance companies for bad faith claims handling. The following is a brief summary of California law concerning an insurer’s right to examine its insured under oath while investigating the claim.

Many property insurance policies (homeowners, earthquake, flood, landlord protection, renters) obligate the policy holer ("insured") to submit to an examination under oath if requested by the insurer in connection with any claim. The examination is normally conducted orally before a court reporter who administers the oath and transcribes the proceeding. A standard examination under oath provision is contained in Insurance Code, sec. 2071: "The insured, as often as may be reasonably required, shall ... submit to examinations under oath by any person named by this company, and subscribe the same ... "

An examination under oath is not a deposition. Depositions occur as part of a lawsuit. However, an examination under oath is similar to a deposition in that it is formal testimony of matters relevant to a claim. An examination under oath can occur before or even after a lawsuit is filed.

Examinations under oath are frequently conducted where a loss is undocumented or the circumstances of the loss are suspicious. The vast majority of losses do not trigger an insurance company to undertake the financial investment to conduct an examination under oath.

Once an examination under oath is requested by an insurer, the insured's submission to an examination becomes a condition precedent to the insurer's obligation to pay the claim. The insurer has the absolute right to require the insured to submit even if its purpose is to gather evidence to defeat the claim. (California Fair Plan Ass'n v. Sup.Ct. (Darwish) (2004) 115 Cal.App.4th 158, 167.)

Moreover, no bad faith action can be maintained because "(t)here can be no unreasonable delay until the insurer receives adequate information to process the claim and reach an agreement with the insureds." (Globe Indem. Co. v. Sup.Ct. (Guarnieri) (1992) 6 Cal.App.4th 725, 731.)

The insurer's right to demand an examination must be exercised in a reasonable manner. (Hickman v. London Assur. Corp. (1920) 184 Cal. 524, 529.) Any objection by the insured as to the reasonableness of the time, place or mode of examination must be timely raised or is waived. (Hickman v. London Assur. Corp., supra, 184 Cal. at 533.) An insured's stalling of a requested exam may be treated as a refusal. (Brizuela v. CalFarm Ins. Co. (2004) 116 Cal.App.4th 578, 588 (insured claimed unavailability on dates requested by insurer and failed for more than 6 months to propose any dates or to respond in a timely manner to insurer's proposed dates.).)

An insured may be required to submit to an examination under oath "concerning all proper subjects of inquiry." (Globe Indem. Co. v. Sup.Ct. (Guarnieri) (1992) 6 Cal.App.4th 725, 731.) Under statutory restrictions (applicable to fire insurance, residential property insurance and residential earthquake insurance (Ins.Code § 790.031)), questioning is limited to information that is "relevant and reasonably necessary to process or investigate the claim." (Ins .Code § 2071.1(a)(2).)

As long as the examination is on proper subjects of inquiry, the insurer's motives are irrelevant and the insured cannot refuse the examination. (Hickman v. London Assur. Corp. (1920) 184 Cal. 524, 530 (expressly approving insurer's right to take EUO, regardless of alleged improper motive).) The privilege against self-incrimination is not ground for refusing the insurer's demand for an examination under oath. (Hickman v. London Assur. Corp., supra, 184 Cal. at 529.)

If an insured fails to submit to an examination under oath reasonably requested by the insurer, or even refuses to answer relevant questions at the examination under oath, the insurer has a right to deny payment of the claim. A policy holder should retain an attorney knowledgeable in the area of insurance bad faith law when requested to submit to an examination under oath by his or her insurer.

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