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CONFIDENTIAL SETTLEMENT COMMUNICATION

NOT ADMISSIBLE AS EVIDENCE

April 22, 2015

Via Email John Kloosterman, Esq. Littler Mendelson, PC 650 California Street 20th Floor San Francisco, CA 94108

Re: Overtime Claims

Dear Mr. Kloosterman:

I understand that you represent COMPANY. My firm represents a group of former

employees who worked for COMPANY in California who seek to recover unpaid overtime wages on behalf of themselves and other similarly situated managers. The purpose of this letter is to inform you of these claims and invite your pre-litigation response. We encourage the company to engage in a dialogue with us to explore the possibility of an early resolution before the parties begin extensive and costly litigation. Absent pre-litigation resolution, we will pursue our clients’ California state law claims for their unpaid wages.

Claims

Based upon the information provided by our clients, we believe that COMPANY has

violated California state wage and hour laws by misclassifying managers as exempt employees and failing to pay them overtime wages. Our clients and other former employees with whom we have spoken consistently and emphatically report spending well over 50% of their work time on clearly non- exempt duties, such as unloading trucks, stocking shelves, arranging shelves, cleaning, and greeting and waiting on customers. According to the documents we have reviewed, these duties are part of their official duties and are consistent across all managers, at least in California.

Proposal for Resolution

We are willing to postpone our plan to file these claims in order to engage in pre-suit

settlement discussions, provided that your client agrees to toll the statute of limitations

for the state law claims of our clients and all similarly situated workers in California. We would then negotiate a confidentiality agreement to promote the sharing of information with the goal of allowing the parties to accurately value the claims. We can then engage in a negotiation process facilitated by a private mediator of the parties’ choosing. If we settle, the parties may agree that our clients will file a lawsuit solely for the purpose of seeking approval of the settlement. This process could substantially reduce your client’s exposure to attorneys’ fees and costs and limit the interference with ongoing operations.

Please also be advised that COMPANY should retain and not destroy all documents,

including documents in electronic and draft form, relating to this matter. We are asking that you take all necessary steps to ensure that COMPANY complies with its legal obligation to preserve all materials that may be in its possession, custody, or control and are relevant to the matters alleged in this letter. The legal duty to preserve such material extends both to hard copies of information and to electronic data, which are a valuable and irreplaceable source of discovery and/or evidence.

Please contact me to discuss these allegations and our proposal for the parties to enter

into a tolling agreement. We kindly request your response on or before May 6, 2015.

Sincerely,

Plaintiffs’ Counsel

Getting to Yes and Beyond: Best Practices in Settling Employment Claims

John Kloosterman & Peter Rukin June 22, 2017

Presented By

Peter Rukin

John Kloosterman

Rukin Hyland LLP

Littler Mendelson PC

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© Littler Presentation | 2017 Proprietary and Confidential

What’s the best way to communicate the demand - Letter/Email/Phone? Tone is important Choosing The Recipient Facts and Law, not hyperbole The Pros and Cons of Dollar Demands Credibility Enhancing Techniques Understand the difference between a demand and extortion, and don’t get too

close to the line. Perception is important here too. Samples

The Opening Demand

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Know Your Audience Pay attention to tone Temper the Outrage as much as the

client allows Avoid the gratuitous insults – effective

advocacy isn’t the same as being a jerk Tell Me Something I Don’t Know Invite a Discussion

Five Characteristics of an Effective Response

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Establish Trust Sharing Information Gets a Deal Done When to Discuss Non-Monetary and

Structural Terms o Before or at the same time as $$

Send a Sample Settlement Agreement or Policy Statement

Settlement Discussions

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Mediation o Choosing the Right Mediator o Choosing the Right Time to Mediate o Mediation Strategies

• The mediation brief—to share or not to share, that is the question. • Joint Sessions • Astronomical Demands and Lowball Offers

o Mediation Techniques: Breaking the Impasse • Bracketing • The Mediator’s Proposal

Closing the Deal

Mediation

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Settlement Terms Desirable for Employees and Employer views on them

• Clear Payment Terms • Mutual and narrow release (if possible) • Letters of Reference/Directed Reference • Tax Allocation

o Settlement Terms to be cautious about • One-way Releases • (Overbroad) Confidentiality clauses • Cooperation clauses • Non-disparagement clauses • No-rehire/right to fire provisions • Tax indemnification • Liquidated Damages

Arbitration

The Settlement Agreement

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Questions?

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Thank You!

This information provided by Littler is not a substitute for experienced legal counsel and does not provide legal advice or attempt to address the numerous factual issues that inevitably arise in any employment-related dispute. Although this information attempts to cover some major recent developments, it is not all-inclusive, and the current status of any decision or principle of law should be verified by counsel. 9

SAMPLE WRITTEN SETTLEMENT PROPOSAL

Mr. Jones proposes the parties settle as follows: A. The parties mutually release each other from all claims and causes-of-action, known or

unknown, which either has against the other as of today’s date, growing out of Mr. Jones’ employment with [Employer]. A 1542 waiver will be provided.

B. Settlement Payments

i) A separate check payable solely to Mr. Jones in the amount of $$$$, minus proper withholding reported to him on a form W-2;

ii) A separate check payable solely to Mr. Jones in the amount of $$$$ for compensatory damages reported to him on a form 1099.

iii) A separate check payable solely to Law Offices of [ATTORNEY] for attorneys’ fees

C. Mr. Jones neither proposes nor requires any other nonmonetary terms [or explicitly state here any non-monetary terms that you particularly want], however, Mr. Jones will not agree to any non-monetary terms your client proposes unless the non-monetary terms your client proposes are consistent with my law firm’s Policy on Non-Monetary Terms of Settlement, the current version of which is attached to this settlement proposal.

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SETTLEMENT AGREEMENT AND GENERAL RELEASE OF ALL CLAIMS

This Settlement Agreement and Release of All Claims ("Agreement") is made by and between Employee ("Employee"), and Employer ("Employer").

WHEREAS Employee has asserted various claims against Employer arising out of his employment with Employer;

WHEREAS Employee and Employer desire to mutually, and finally resolve and compromise all issues and claims arising out of Employee's employment and all claims that were or could have been raised to date against Employer and any parties who were or could have been named in these claims;

THEREFORE, in consideration for the mutual promises and undertakings of the Parties as set forth below, Employee and Employer hereby enter into this Agreement.

1. Settlement Payments. As consideration for the promises and undertakings herein, Employer agrees to pay Employee the gross amount of XXXX Thousand Dollars ($XXX,000.00) in full satisfaction of all claims, rights, demands, actions, and obligations that Employee has or may have against Employer and all parties who were or could have been named in the claims, based on the claims that were or could have been raised in the claim and any act or omissions occurring prior to the date of execution of this Agreement.

This payment will be in the form of three checks. The first check will be made payable to "EMPLOYEE NAME" in the gross amount of $ , less appropriate tax withholdings and deductions pursuant to the last W-4 submitted by Employee to Employer. Employer will issue Employee a W-2 in this amount for 2017. The second check will be payable to "EMPLOYEE NAME" in the amount of $XXXX. Employer will issue a Form 1099 to Employee for this amount for 2017. The third check will be payable to "LAW FIRM NAME" in the amount of $XXXX. Employer will issue a Form 1099 to LAW FIRM NAME for this amount for 2017.

The settlement checks to Employee will be delivered no later than fourteen (14) days after the receipt by counsel for Employer of the Settlement Agreement and General Release of All Claims, executed by Employee and counsel for Employee, and the submission to counsel for Employer of both IRS Forms W-9 for Employee and LAW FIRM NAME and the expiration of the revocation period set out in Paragraph 18. Employee acknowledges and agrees that he has already received all other wages and other compensation due and owing his from Employer for work performed during his employment.

2. Complete Release and Discharge of Claims. As consideration for the payment and undertakings described herein, Employee individually and on behalf of his representatives, successors, trustees, creditors, and assigns, completely releases and forever discharges Employer, and any parties who were or could have been named in the claim and all of their representatives, officers, attorneys, owners, agents, partners, employees, parents, joint ventures, insurance carriers, affiliates, successors and assigns, from all claims, rights, demands, actions, obligations, claims, and causes of action of any and every kind, nature, and character, whether known or unknown, which Employee may now have, or ever had, against any and all of them arising from or in any way connected with the employment relationship between Employee and Employer, and any actions arising during or as a result of their employment relationship or the termination thereof.

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Similarly, As consideration for the payment and undertakings described herein, Employer completely releases and forever discharges Employee from all claims, rights, demands, actions, obligations, claims, and causes of action of any and every kind, nature, and character, whether known or unknown, which Employer may now have, or ever had, against Employee arising from or in any way connected with the employment relationship between Employee and Employer. This release covers all statutory, common law, constitutional, and other claims arising from or in any way connected with the employment relationship between Employee and Employer, including, but not limited to, all wrongful or constructive discharge claims; all claims of discrimination, harassment and retaliation; all claims relating to any wages or overtime; all claims relating to contracts of employment, express or implied; any claims for misrepresentation or breach of contract and/or breach of the of covenant of good faith and fair dealing, express or implied; any claims for misappropriate of trade secrets; any claims for defamation; any claim for attorneys' fees, costs, or expenses, or interest on any sums allegedly due; any tort claim of any nature; any claims under federal, state, county, or municipal statute or ordinance; any claims under the California Labor Code, the California Industrial Welfare Commission Wage Orders, the California Code of Regulations, the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family Medical Leave Act, the California Family Rights Act, the Age Discrimination in Employment Act, as amended, the Older Workers Benefit Protection Act, any claims under the California Business & Professions Code, and any other laws and regulations relating to employment, employment discrimination, and/or wages to the extent allowed bylaw.

This release shall not release any claims that cannot be released by law, including but not limited to claims for workers' compensation benefits and claims for indemnity pursuant to California Labor Code section 2802.

4. Taxes. Employee and Employer understand that this settlement payment may be construed by public authorities as a taxable event. Employee shall be solely responsible for the payment of any additional taxes due for the respective portions paid to him in connection with the aforesaid settlement payment. Employee shall indemnify and hold harmless the released parties for any taxes Employee owes and fails to pay. The indemnity in this paragraph does not extend to any failure by Employer to pay applicable payroll taxes in connection with the payments under Paragraph 1.

5. Waiver of Unknown Future Claims. Employee and Employer acknowledge that they have read Section 1542 of the Civil Code of the State of California, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR

Employee a n d E m p l o y e r understand that Section 1542 gives them the right not to release existing claims of which they are not now aware, unless they voluntarily choose to waive this right. Having been so apprised, Employee and Employer nevertheless voluntarily elect to and hereby do waive the rights described in Section 1542, and elect to assume all risks for claims that now exist in their favor, whether now known or unknown.

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6. Non-Admission. It is understood and agreed that this is a compromise settlement of a disputed claim or claims, and that neither this Agreement itself nor the furnishing of consideration for this Agreement shall be deemed or construed as an admission of liability or wrongdoing of any kind by Employer, or any other entity or individual affiliated with Employer. Employee and Employer acknowledge that the promises made herein in consideration of the settlement and release referred to herein do not constitute an admission or concession of liability by either party on account of any said claims or matters, liability for which is expressly denied.

7. Confidentiality. Employee agrees that the terms and conditions of this Agreement are confidential and shall not be disclosed to any other person except to Employee's accountant, financial advisor, attorney, spouse, domestic partner, taxing authority or as required by court order, subpoena, legal process or applicable law. In response to inquiries about the status of the claim, Employee may state that the matter has been resolved.

8. Non-Disparagement Employee agrees that he will not disparage Employer or any of the released parties in any manner either orally or in writing. Employer agrees that the following individuals will not disparage Employee: [IDENTIFY MANAGEMENT EMPLOYEES SUBJECT TO NONDISPARAGEMENT]

10. Severability. If, for any reason, any paragraph, or portion of a paragraph, or any other provision of this Agreement is not enforceable, then any such unenforceable portion shall be deemed severable, and the remainder of this Agreement shall nonetheless remain binding and effective.

11. No Modification. It is expressly understood and agreed that this Agreement may not be altered, amended, modified, or otherwise changed in any respect whatsoever, except by a writing duly executed by Employee and an authorized representative of Employer, which writing must directly express the intention of the Parties to modify this Agreement for it to be effective. Each party hereto hereby agrees and acknowledges that such party will make no claim at any time or place that this Agreement has been orally altered or modified or otherwise changed by oral communication of any kind or character.

12. Signature in Counterparts and by Facsimile. This Agreement may be executed in counterparts, with each counterpart being and having the same effect as an original, but all of which together shall constitute one Agreement. The signing of a copy shall have the same force and effect as the signing of an original, and a facsimile signature shall be deemed an original and valid signature.

13. Governing Law. This Agreement shall be construed and enforced pursuant to the laws of the State of California.

15. Reasonable Attorneys' Fees and Costs to Prevailing Party. If any party brings any sort of action to enforce any provisions of this Agreement or for any breach of this Agreement, then the prevailing party shall be entitled to recover reasonable attorneys' fees and costs in such action.

16. Employment with Employer. Employee agrees not to seek employment or accept employment with Employer. If Employee becomes employed with Employer in the future, this

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Agreement shall be just cause for the termination of such employment and shall not be deemed as retaliation for any prior act or omission. If Employer in the future acquires an entity that already employs Employee, this paragraph does not require the termination of that employment.

17. Integration. This Agreement represents the entire agreement between Employee, on the one hand, and Employer on the other. No other agreement, statement, or promise made by Employer, or any owner, employee, representative, or counsel of Employer, as to any matter addressed in this Agreement, shall be binding or valid. Employee expressly warrants that he has read and fully understands this Agreement; that he has had the opportunity to consult with legal counsel of his own choosing and to have the terms of this Agreement fully explained to his; that he is not executing this Agreement in reliance on any promises, representations, or inducements other than those contained in this Agreement; and that he is executing this Agreement voluntarily, free of any duress or coercion, from any source whatsoever.

18. Right to Consult Attorney. Employee represents and acknowledges that he has been advised of his right to consult an attorney before entering into this Agreement and that he has done so.

19. Revocation of Agreement. This Agreement shall take effect seven (7) days after Employee executes it. Employee shall have the right to revoke the Agreement during a period of seven (7) days following his execution of the Agreement. In order to revoke this Agreement, Employee must deliver his revocation in writing to NAME OF EMPLOYER’S COUNSEL, counsel for Employee, at NAME OF EMPLOYER’S LAW FIRM, ADDRESS OF EMPLOYER’S LAW FIRM.

Employee agrees and acknowledges that he has had a reasonable period of time to

consider the terms of this Agreement. DATED: March __, 2017 By: Employee DATED: March __, 2017 By: Employee

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