Business Law, employment law, Legal

What To Do When Firing an Employee in California

1. Documentation of the reason for termination

What is the reason for termination? Is there a company policy that was violated? [Note: Is the company policy in writing?  Has it been distributed to the employee?  Is there a signed acknowledgement of the policy in the employee’s file?]  Who was involved in termination decision? Review documentation for termination if “for cause” and ensure this documentation is maintained in personnel file.

2. Final pay and accounting

Employers need to prepare the employee’s final paycheck and ensure that any unused accrued vacation time is also included.

Final wages must be paid within certain time limits, including the following:

  1. An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.
  2. An employee who gives at least 72 hours prior notice of quitting, and quits on the day given in the notice, must be paid all earned wages, including accrued vacation, at the time of quitting.
  3. An employee who quits without giving 72 hours prior notice must be paid all wages, including accrued vacation, within 72 hours of quitting.
  4. An employee who quits without giving 72-hours’ notice can request their final wage payment be mailed to them. The date of mailing is considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.
  5. Final wage payments for employees who are terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours’ notice and do not request their final wages be mailed to them, is at the office of the employer within the county in which the work was performed.

Employers should also review if commissions, bonuses, or expense reimbursement owed to employee?  Obtain all expense reimbursement forms from employee.

Employers with multiple locations need to ensure that the final wages are made available.  The place of the final wage payment for employees who are terminated (or laid off) is the place of termination. The place of final wage payment for employees who quit without giving 72 hours prior notice and who do not request that their final wages be mailed to them at a designated address, is at the office of the employer within the county in which the work was performed. Labor Code Section 208.

 3. Company property and passwords

Obtain all company property from employee and reset passwords.  Also, has employee returned all company provided uniforms?  Have all company keys been returned?  The company should also develop a list of all passwords employee had access to and ensure the passwords are reset.

4. Final notices

Employers need to ensure that all required notices are provided to the employee.  For example, common notices include:

  • Notice to Employee as to Change in Relationship (download here)
  • For your Benefit (Form 2320) (download here)
  • COBRA and Cal-COBRA Notices from insurance provider
  • Notify insurance provider
  • Health Insurance Premium (HIPP) Notice (download here)

5. Retention of employee files

Employers need to take measures to secure and save employee’s file, wage, and time records.

family law, Legal

6 Things You Need to Know About Divorce

1. Don’t Expect to “Win” Your Divorce Case

A lot of people start their divorce hoping to “beat” their spouse in court. In fact, there’s seldom a true winner in divorce. The typical divorce involves various issues, such as child custody, support, and the division of property. Rarely do divorcing spouses end up with everything they want. For example, one spouse might be awarded primary physical custody of the children, but may receive a much lower amount of spousal support than requested; it’s virtually impossible to tell the “winner” from the “loser” so trying to “win” is pointless.

Instead, consider the consequences of a full-blown court battle before you go down that path. In addition to the many thousands of dollars you’ll spend, your children may suffer the most in a heated divorce battle. After the dust has settled, you may soon forget who “won.”

2. Don’t Make Important Decisions Without Thinking Them Through

Many life-changing decisions come up during a divorce. For example, you may have to determine whether to you need to sell the family home. Resist the impulse to make a quick decision just to get the case over with. When making important choices, it’s essential that you consider the potential consequences.

3. You’re Getting Divorced: Your Kids Aren’t

It’s easy to get wrapped up in the heat of the moment. However, saying cruel things to your spouse in the presence of your children can have a lasting effect. Psychological studies show that the more parents fight during a divorce, the more damaging the whole process is to the children.

Whenever you’re about to say something hurtful give yourself some time to think before you speak. A simple rule to follow is to count to ten before you answer a question or make a statement.

In addition, unless there’s a history of abuse or neglect, your children will continue to have a relationship with their other parent. No matter how upset you are with your spouse, you should not try to discourage or interfere with a healthy parent-child bond.

You may want to consider asking an experienced mental health professional to counsel your children about the divorce, and seek counseling for yourself as well, so you can learn how to address your children’s needs during this difficult process.

4. Don’t Believe Everything Other People Tell You About Their Divorce

Your divorced friends may give you advice about what should happen in your divorce. Unfortunately, the information and advice you get from other people can be misleading or wrong.

Every divorce has a different set of issues. Your friends may believe what happened in their divorce is typical, but it’s best not to base your decisions on someone else’s experiences. Instead, rely on the advice you get from your attorney, mental health professionals, and financial consultants, all of whom are familiar with the specifics of your case.

5. Court is Not All That It’s Cracked Up to Be

When things are not going well in a divorce case, one spouse may threaten to terminate negotiations and head to court. However, the road to a divorce trial is long and costly. The expense of a trial can deplete the very assets that are often the subject of the dispute. Even simple matters can require multiple court days to complete, and after spending many thousands of dollars, spouses and their attorneys are left with the total uncertainty of how a judge will rule.

6. Create an Inventory of Household Furniture and Furnishings and Make Copies of Important Documents

Disputes over furniture, furnishings and other valuable items, such as a great wine collection or an expensive piece of art, can be avoided by taking a complete inventory of your home as follows:

  • take photographs of every item and photograph sets of small items, such as dinner ware, together
  • use the front page of that day’s newspaper in every photograph in order to create a “time stamp,” which avoids any claims that the photo was taken at an earlier date
  • keep your photos in a safe, protected place
  • create a list of all items, including where they’re located and your estimated value of each, and
  • get appraisals or ask for insurance inventories of the items in your inventory.

Despite the strict rules for disclosure, some divorcing spouses will hide or destroy key documents such as pre-nuptial agreements. This problem can be avoided by making copies of important documents as soon as you decide to file for divorce, or learn that your spouse is doing so.

Business Law, employment law, Legal

What Small Businesses Should know about Meal Break Waivers

Many California employers know that anytime an employee works a 8 hour shift, that must include an UNPAID meal break and a two 10 minute PAID rest breaks. What about when an employee doesn’t work 8 hours and doesn’t want to take a meal break? Under California law, there is an option to waive that break.

1. Meal break timing obligations.

An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than thirty minutes.  A second meal period of not less than thirty minutes is required if an employee works more than ten hours per day. Labor Code Section 512.

2. Employer’s duty to authorize meal breaks.

As long as employers effectively allow an employee to take a full 30-minute meal break, the employee can voluntarily choose not to take the break, and the employer would not owe the employee the additional hour of pay in the form of premium pay for a violation.

While employees may voluntarily work through meal breaks, if the employer knows or should have known that the employee working during this time, the employer must ensure that the employee is paid for the time working.

3. Employees may waive meal breaks for shifts less than 6 hours or shifts less than 12 hours.

If the total work period per day for an employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.  Likewise, if the if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and employee only if the first meal period was not waived.  Labor Code Section 512.

 4. Meal break waivers for shifts less than six hours and less than 12 hours are not required to be in writing, but should be.

Labor Code section 512 does not require an employee’s waiver of their meal breaks for shifts less than six hours or shifts less than 12 hours to be in writing.  However, in order to avoid any potential disputes and to be able to defend against any potential claims by disgruntled employees, it is always a good practice to have the voluntary waivers documented and signed by employees.

Business Law, employment law, Legal

Let’s Make Everyone An Independent Contractor!

Although the idea of converting all employees to Independent Contractor to avoid Wage and Hour headaches as well as payroll taxes sounds like Manna from heaven, it guarantees that you will be found liable for violations under California Employment laws.

Mislabeling a worker as an independent contractor creates potential liability for employment taxes and penalties, and liability for failure to fulfill the many legal obligations owed to an employee, such as wage and hour requirements. California courts have decided several cases about who is, or is not, an independent contractor. Cases have been brought for failure to pay overtime, as well as for other labor code violations.

California administrative agencies, the federal Department of Labor (DOL) and the Internal Revenue Service (IRS) closely scrutinize alleged principal/independent contractor relationships to ensure that those relationships are not, in reality, employer/employee relationships. Enforcement efforts to combat misclassification are on the rise.

Challenges to the legitimacy of an existing independent contractor/principal relationship can arise in many forms, including:

  • Filings for unemployment insurance (UI) benefits
  • Claims for unpaid wages
  • Claims for workers’ compensation
  • Charges of employment discrimination
  • Investigations by the IRS, the DOL, the Department of Industrial Relations (DIR) and Employment Development Department (EDD) to audit wage payments, workers’ compensation coverage and Unemployment Insurance Fund contributions

Willful Misclassification

It is unlawful for any person or employer to “willfully misclassify” an individual as an independent contractor. The law also prohibits employers from charging a misclassified independent contractor for goods, materials, space, rental, services, government licenses, repairs, equipment maintenance or fines that arise from the individual’s employment, if the charges would have violated the law if the person had been an employee.1

Willful misclassification means: “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

The civil penalty for violation of this law ranges from $5,000 to $25,000 for each violation. Other remedies include requiring the employer to display on its website or in the workplace a notice of the serious violation of misclassifying an independent contractor, a statement that the employer has changed its business practices in order to comply with the law, and information on how to contact the California Labor and Workforce Development Agency to report misclassification.

The notice must be posted for one year, and signed by an officer of the employer.

The law also imposes joint liability on a person who is retained to assist with classification and who knowingly advises an employer to treat an individual as an independent contractor to avoid employee status. Joint liability does not apply to a licensed attorney or to a person who provides advice to his or her own employer. Joint liability would apply to a non-attorney outside consultant.

These civil penalties are in addition to any fines or taxes owed to the DOL, IRS or the EDD or any unpaid wages owed to workers.

Defining Independent Contractor

California labor law defines an independent contractor as “any person who renders service for a specified recompense for a specified result, under the control of his principal as to the result of his work only and not as to the means by which such result is accomplished.”2

An independent contractor works for another entity under a verbal or written contract, usually for a specific length of time. The independent contractor is responsible for only his/her own work, and is generally responsible for his/her own schedule. The independent contractor must also be responsible for how the work is completed.

  • You should assume all workers are employees unless they clearly meet all legal requirements and pass all tests various federal and state agencies use for proper classification of independent contractors. Consultation with legal counsel is usually warranted.

family law, Legal

What You Need To Know About Divorce in California

Divorce can be a difficult time for all of the parties involved. Being properly informed before you file for divorce will put you on the right track and help put your mind at ease as you enter into the divorce process. It is always a great benefit to have certain questions answered before entering into a major life decision.

Date of Separation

First and foremost, it is extremely vital that you document the date of separation. This date will be the deciding factor in concluding what property and assets can and will be divided between you and your spouse in a California Family Court versus what property and assets belong solely to you.

It’s really as simple as it sounds. Any property and assets acquired before the date of separation can be communally divided between you and your spouse, while anything acquired after the date of separation, cannot.

If you find it is too difficult or impossible to come up with an approximate date of separation, don’t worry. California court will conduct two tests, an objective and a subjective, that will help determine that information for you.

One area of note regarding this matter is the home. California has divorce-related automatic restraining orders prohibiting the sale or mortgaging of the marital home. Even If you or your spouse holds the sole title to your home, the property is considered communal. If this is the case in your situation, make sure to discuss this issue with your Attorney.

Six Month Minimum

Next, it is important for you to know that the state of California will not restore your status to single or complete your divorce until no less than six months has elapsed. This means that you will not be able to remarry or claim ‘single’ on your taxes until six months has passed. While six months is the ultimate minimum, it is a fact that most divorces may take longer.

The six month waiting period begins when the respondent, the spouse being served the divorce petition, receives the paperwork filed by the petitioner, the spouse that is taking action. Since California is a no-fault divorce state, all it takes is one spouse to file for divorce and start the process.

Regional Requirements

Finally, you might be wondering if you have to live in California to file for a divorce in the state. The answer is yes. Either you or your spouse must have lived in California for at least six months and have resided in the county that you plan to file for divorce in for at least three months. If you have lived in California for six months, but in different counties for the minimum three months, you may file in either county.

If you fail to meet either of these requirements, you may file for a legal separation until you meet them. Once the required time has passed, you may then file an “Amended Petition” and ask the court for a divorce.

If you have any questions or need help regarding any of these issues, contact us to set up a consultation.

Business Law, Legal

So You Want to Start a Business?

Do the following tasks either before launch or during the early days of your startup.

1. Determine viability

Be brutally honest.  Your startup needs to be something you can make a profit doing or delivering.  Ask yourself: would you buy it? Run the numbers: will customers pay enough so that you can cover costs and make a profit?   Here is a list of 29 more questions to ask, attributed to noted investor Paul Graham.

2.  Create a business plan

It’s easy to convince yourself that you don’t need a business plan, but creating a business plan with financial projections forces you to think through details. Keep your plan a living breathing thing that you revisit and adapt regularly.

3.  Figure out the money

Most startups take a lot more time to get off the ground than you expect. Know where your living expenses for the first year will come from (savings, a job, spouse’s income, etc.).  If you need financing for the business start investigating as soon as possible.

4. Get family behind you

Spend time to make sure your spouse and other close family ‘buy into’ your startup.  You’ll have enough challenges without resistance from family.

5. Choose a business name

You want a name that will stick in your target audience’s heads. And it shouldn’t already be taken by another company. Do Google searches and use a corporate name search tool to see if the name you have in mind is unique. Check at the state and Federal level.

6. Register a domain name

Get a matching domain to your business name.  An AOL email address or a website with free hosting and a name like mysite.wordpress.com makes it seem like either (a) you are not running a real business or (b) you don’t plan to be around long.

7. Incorporate / figure out legal structure

Incorporating your startup can protect your personal assets. Talk over structure (corporation, LLC, sole proprietorship) with your attorney and accountant.


8. Apply for an EIN

An Employer Identification Number (EIN) helps you separate yourself from your business. You’ll need it if you plan to incorporate your business or open a business bank account.  Plus, with it you can avoid giving out your social security number (an opening  to identity theft). EIN numbers are free; apply online.


9. Investigate and apply for business licenses



You may need one, if not several, business licenses for your startup, depending on your industry and where you are located.  Most licenses are at the state or local level.  Here in the United States, the SBA has a helpful business license and permits tool.

10. Set up a website

Get your website up and running as soon as possible. Today, it’s necessary for credibility.  Even if your product is not yet built, you can start with company information.

11. Register social media profiles

Getting set up on the major social media channels (Facebook, LinkedIn, and Twitter, to start) will make marketing on them later easier. Also, it’s important to reserve your brand as a profile name. Try Knowem.com to reserve the names.

12. Start your revenue stream

Start generating revenue as soon as possible.  At the early stages of a startup there is never enough money – resist the temptation to wait until things are “perfect.” Oh, and get your lawyer to create any customer contract forms necessary.


13. Rent retail or office space

If you’ve got a brick-and-mortar business, you’ll need to sort this out early. If you plan to run a retail business, pay attention to foot traffic, accessibility, and other factors that will affect the number of people who will walk in your store. EXCEPTION: If you don’t have a brick and mortar or retail business, then hold off renting an office as long as possible to avoid saddling your startup with lease payments.

14. Order business cards

As a startup founder, you’ll be doing a lot of networking, so order plenty of business cards. They are inexpensive enough that you can reorder them later if things change. Without cards you lack credibility.

15. Open a business bank account

It’s all too easy to use your personal bank account to pay for business expenses, but it becomes a gnarl to untangle later.

16. Set up your accounting system

Once you have your bank account set up, choose an accounting program. Start as you intend to go. Few things will doom your business faster than books that are a mess.

17. Assign responsibilities to co-founders

If you have one or more founders, it’s imperative that you decide who will do what up front. Put it in writing.  Co-founder disagreements can destroy your business.

What You Can Do A Bit Later

While you don’t want to put off these tasks too long, they don’t need to be checked off your list before you launch.

18. Upgrade your smartphone and choose apps

As an entrepreneur you are going to be on the go – a lot. I can’t emphasize enough how useful a good phone with good business apps can be, in running your startup. Get a credit card swipe device to accept payments, too.

19. Find free advice

Your local SBA office, SCORE, and other small business resources can provide you with free advice, access to business templates, and other tools.

20. Consult your insurance agent and secure coverage

Depending on the type of business you’re starting, you may need insurance of one kind or another, like liability, workers’ comp, or health insurance, especially if you hire full-time staff.

21. Hire your first employee

Depending on the type of business you have, you may need staff from day one (retail) or you may be able to outsource to  freelancers, interns, and third-party vendors for a while (service and tech businesses).   Just remember, trying to do everything yourself  takes you away from growing the business.

22. Line up suppliers and service providers

Finding a good source of inventory is crucial, especially in certain types of businesses (retail, manufacturing). Beyond inventory, line up good reliable suppliers and service providers so you don’t have to sweat the details.

23. File for trademarks and patents

The best thing to do is consult an attorney early about the need for patents, especially.  Get the advice early. Then you may be able to defer filing for a while, depending on the nature of your business.

24. Work your  network

Reach out to former co-workers and colleagues, as well as friends and family. Don’t pressure them to buy your products or services.  Instead, tap into them for introductions and help with other things on this startup checklist.

25. Don’t waste time on “partnerships” 

Be careful about wasting time on “business partnership” discussions. Your business won’t be attractive to potential partners unless and until you start making headway. Focus your precious time to make sales and get customers.

26. Refine your pitch

You need a good elevator pitch for many reasons: potential investors, customers, prospective new hires, bankers.  If you can’t persuasively and clearly pitch your business, how can you expect key stakeholders to buy in?

27. Refine your product, and marketing and sales approach

As you go along you will learn more about the marketplace.  Use customer feedback to refine your product and service offerings, and your go-to-market approach.

28. Secure your IT 

Whether you’re running a tech company or not, you likely have sensitive data on computers and devices that you want protected. Protect it from intrusions and disasters.  Back it up!  IT problems can derail a fledgling company.

29. Get a salesperson or sales team in place

In many startups the business owner starts out as the chief sales person. But to grow you need a dedicated sales function, so you can focus on activities other than day-to-day sales.

30.  Get a mentor

It’s all tooneasy to work “in” your business rather than “on” it.  As Michael Gerber tells us in The E-Myth, we need to be working “on” our businesses if we want them to grow and flourish. A mentor who has succeeded in your industry can provide you with priceless advice and serve as a sounding board.

Your checklist might be longer than this, but organizing what needs to be done before you launch and what you can take care of down the road makes it easier to prioritize your tasks.