Business Law, employment law, Legal

Upcoming Business and Employment Law Seminar: Legal Reasons #75

I am glad the week is done as I and my senior associate Jemal Yarbrough cannot wait to present information that we feel is vital for anyone considering starting a business or any business with employees. One of the main things that motivated me to start my own law practice was to find ways to be in service to others in the legal arena and give information that is beneficial (and affordable) to anyone who desired it.

As in house counsel for Ziba Beauty for the past 17 years, I know it is very easy to run afoul of the many employment laws in California.  Too often, small businesses are not aware of the various rules in regard to wage and hour issues as well the recent uptick in sexual harassment claims. If you are interest, please do come out.

 

Happy Friday!

Business Law, employment law, Legal

Common Small Business Employee Lawsuits: Legal Reasons #74

The most common lawsuits brought against businesses are wrongful termination suits brought by employees or candidates who have suffered a negative employment action. This can be anything from being fired to being demoted or even passed over for an advancement opportunity. If the employee or candidate believes that the action was taken for a reason related to race, gender, religion, identity, or another protected classification, that employee might file a lawsuit. For this reason, it is important to document any sort of negative or positive behaviors at work, so that if an employee does complain of discrimination, the courts can see the employee’s work history and the real reason why he or she may have been passed over for a promotion. Disparaging remarks made about any of these protected classes have no business in a work place as they can create a hostile work environment and lead to lawsuits as well.

Many employers choose to save money by denying their employees overtime pay. This can create many extra costs, as employees will sue for the money they are owed, and the legal fees can be significant. It is a good idea to have contracts establishing the boundaries of a relationship between an employer and an employee to minimize confusion.

It also makes sense to put agreements with vendors and customers in writing. The contracts should include a general description of the work to be performed, a list of any items to be delivered, a project schedule with deadlines, the fee, and the circumstances under which additional fees might be charged, warranties included with the work, how long the contract lasts, how it can be terminated, and how disputes will be resolved.

Personal injury lawsuits against businesses are also common, so it is important to make sure that a place of business is kept in safe condition. Floors should always be dry and warnings should be presented to customers of any dangerous conditions. Drivers should be selected carefully as any accident they cause can be made the responsibility of the business that employs them. Employees who are injured at work are usually precluded from suing their employer and are instead referred to worker’s compensation courts which have their own legal fees. Most states require employers to carry insurance in case of a workplace injury.

Business Law, employment law, Legal

4 Common Legal Mistakes by Small Businesses:Legal Reasons #72

1) Failing to “put it in writing” early

Before founders do any significant work together, it is essential to put into place a written agreement which outlines the roles and obligations of each respective party. Founder Agreements provide clarity regarding critical aspects of the work relationship, including but not limited to ownership percentages, salaries, removal grounds and procedures, governance and management, voting protocol and profit-sharing.

2) Failing to carry out buy-sell provisions

The decision by one founder to leave the company can lead to internal turmoil, customer erosion and disruption in revenue flow. These issues also could arise in the event a founder passes away or experiences long-term disability.

Simply put, failing to plan for the end is planning to fail. A properly drafted buy-sell agreement executed by the founders of the business at the outset (in conjunction with a founder agreement) can effectively account for how the company will proceed in the event of unanticipated change.

3) Using inadequate employment agreements

It is critical to invest in properly drafted agreements that can serve as the foundation for the employment relationship. Common terms included in an employment agreement include, among other things, the length of employment or whether the employment is at-will; the classification of the worker (i.e., employee/independent contractor, exempt/non-exempt); and rights and restrictions upon termination.

Employers should be mindful to not expose the company to liability by disregarding any prior-employment related obligations of job candidates, including any restrictive covenants and/or obligations to return sensitive documents that belong to the prior-employer.

4) Misclassifying workers

Many employers hire independent contractors rather than employees and/or misclassify employees as exempt under the Fair Labor Standards Act in an effort to avoid the payroll obligations that come with the traditional employment relationship, such as the duty to pay minimum wage and overtime. Serious liability can result from these misclassifications, including substantial wage repayment going back as far as three years and other harsh penalties.

employment law, Legal

Employment Laws All Small Businesses Should Know

Parental Leave for Small Employers

An important new law requires that small employers provide new parents with up to 12 workweeks of unpaid leave.

SB 63, the New Parent Leave Act, requires small businesses with 20 or more employees to provide eligible employees up to 12 weeks of unpaid, job-protected leave to bond with a new child — leave that must be taken within one year of the child’s birth, adoption or foster care placement. SB 63 requires employers to provide parental leave only for baby bonding; it does not require employers to provide leave for other reasons, such as a family member’s medical issue.

Ban-the-Box Law

AB 1008 prohibits employers with five or more employees from asking about criminal history information on job applications and from inquiring about or considering criminal history at any time before a conditional offer of employment has been made. There are limited exemptions for certain positions, such as those where a criminal background check is required by federal, state or local law.

No More Salary History Questions

AB 168 bans employers from asking about a job applicant’s prior salary, compensation or benefits (either directly or through an agent, such as a third-party recruiter).

In addition, employers cannot rely on salary history information as a factor in determining whether to hire the applicant or how much to pay the applicant. However, an employer may consider salary information that is disclosed voluntarily by the applicant without any prompting.

Worksite Immigration Enforcement and Protections

The Immigrant Worker Protection Act (AB 450) provides workers with protection from immigration  enforcement while on the job and imposes varying fines from $2,000 to $10,000 for violating its provisions.

This bill also makes it unlawful for employers to reverify the employment eligibility of current employees in a time or manner not allowed by federal employment eligibility verification laws.

 

 

 

Business Law, employment law, family law, Legal

How Much Will It Cost? Legal Reasons #67

When clients ask, “how much does a lawyer cost,” the answer can vary from $150 to $350 or more per hour. But if you’re facing a legal issue, working with a lawyer is very helpful and can affect the outcome of the case. Before hiring a lawyer, you should talk to him or her about fee schedules, flat-rate vs. hourly billing, retainer vs. contingency fees, and a ballpark estimate of the total cost based on the case.

As you consider how much a lawyer will cost, think about how much you have to spend and what the outcome is worth to you.

For example, if you’re thinking about taking legal action against a local business that did not repair your refrigerator properly, do you have enough money available to hire a lawyer, present evidence, and get the court to rule in your favor? Even if you do have enough money, is the overall cost of replacing the refrigerator or having someone else repair it worth the trade-off?

If you decide to move forward with legal action, or you need assistance with a legal matter, ask all potential lawyers that you meet with about their billing practices and fees. If the lawyer is not willing to discuss the costs with you, it’s a sign of poor client service.

Most lawyers bill under one (or several) of the following arrangements:

  • Hourly rate: this is the most common way for a lawyer to bill. This process requires careful documentation of all time spent working on documents, reviewing case files, presenting information in court, and any other tasks related to the client’s case. The client and lawyer will agree on the hourly rate before getting started with the case.
    • A lawyer’s hourly rate varies drastically based on experience, location, operating expenses, and even education.
  • Retainer fee: many lawyers require a retainer fee up front, which is something like a down payment on the case. As the lawyer works on your case, he or she will deduct the costs from the amount you paid and send you periodic invoices showing the deductions.
    • If you drop a case for which you have already paid a retainer fee, it is most likely non-refundable.
  • Flat fee: a lawyer may offer a flat fee for a specific, simple, and well-defined legal case. Examples of cases eligible for flat fee billing include uncontested divorces.
    • Before agreeing to a flat fee, make sure you understand what is covered in the agreement. It may not include filing fees or other fees associated with the legal process, so you’ll need to plan accordingly.
  • Contingency fee: a lawyer may offer this type of billing in a  personal injury case. With a contingency fee, the client doesn’t pay until the case is resolved. Upon resolution, the contingency fee is a percentage of the settlement or money awarded on behalf of the attorney’s client.
Business Law, employment law, Legal

So You Want To Start a Business?Legal Reasons #66

Before starting a business in California, you should consider the multitude of legal issues that surround such a task, including choosing the right business structure (sole proprietorship, corporation, limited liability company, or partnership), selecting the right company and/or product name, and how the business (including legal and accounting fees) will be financed, what potential liabilities you face with your proposed business, and what licenses and permits you will need.

Choosing the Right Business Entity For a California Business Start-Up.

Once you have determined that you are prepared to start your own business, you should begin the process of making your business legal. The first step should be to decide which legal structure is right for you. There are four main types: sole proprietorship, partnership, corporation and limited liability company. Which one is right for you? A sole proprietorship may be sufficient if: (1) you have no assets; (2) your proposed business is unlikely to be a source of liability; and (3) you don’t anticipate earning more than $50,000 a year. If you do have assets that you want to protect, or if you believe your new business will generate at least $50,000 in income, then you should consider either a corporation or a limited liability company. See, S-Corporation or LLC and then discuss your impressions with a local attorney, hopefully Melissa C. Marsh. Seeing an attorney for just an hour to learn more valuable information could save you thousands down the road.

Sole Proprietor.
If you are not ready to form a corporation, or a limited liability company, you can simply remain a sole proprietor. To start a business as a sole proprietor, all you need to do is get: (1) a taxpayer identification number ( EIN ), (2) a fictitious business name, (3) a local city business license, (4) a seller’s permit if you will be selling taxable goods, and (5) other city or state permits required for your particular business. Prior to selecting a fictitious business name, it is important to make sure the name is available.

Partners.
If you are planning to go into business with one or more other individuals, get a commitment — an agreement that sets forth your planned relationship, expectations, and financial commitment. If you are forming a corporation, make sure there is a shareholder buy-sell agreement in place. If you are forming a limited liability company, make sure the Operating Agreement contains buy-sell provisions. If you plan to operate as a general partnership, ask yourselves if the additional co-owners are merely going to contribute products and/or services as opposed to money. If so, consider forming a single owner business (sole proprietorship, corporation, or single member LLC) with contractual agreements with those who are to provide products and/or services. If a party later fails to perform, then you can typically find a replacement. If you are going to operate as a partnership, then make sure you execute a written partnership agreement that contains provisions addressing how each partner can leave the business.

It is always best to start a business on your own, rather than with partners. If co-ownership is essential, then make sure you have a well written partnership agreement that: (1) calls for the formation of a corporation or limited liability company if a certain goal is met, and (2) contains buy-sell provisions that provide for the buyout of any co-owner at a set price in the event the co-owner fails to perform, becomes disabled, dies, files for bankruptcy, or becomes involved in a divorce. Most owners of a business never intend, or expect, to become partners with their co-owner’s spouse, but that is exactly what can happen if you don’t have a well prepared buy-sell agreement executed by all of the co-owners.

Corporation. To determine if a corporation will best suit your needs, I will cover in the next blog post.