Business legal services in Silicon Valley

Hiring Employees vs. Independent Contractors

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When you are hiring new people to work for your business, it is essential to have clarification about whether you are hiring employees or independent contractors. The distinction between employees and independent contractors is important for your own business purposes, as well as for the worker. As you may know, employees have certain rights that independent contractors do not have, and accordingly, Bay Area employers have certain obligations to employees that they do not have to independent contractors.

There is a new law in California that clarifies the test an employer should use for determining whether a worker is an employee or independent contractor. You should seek advice from our Fremont area business law attorney to determine what you must do to comply with the law concerning employees and independent contractors.

California’s ABC Test

Assembly Bill 5 (AB 5) took effect on January 1, 2020. The new law replaces the common law test for determining whether a worker is an independent contractor or an employee. Under the new law, you must classify workers as employees—and not as independent contractors—unless your worker meets all the following conditions of the ABC test:

  • A: The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
  • B: The person performs the work that is outside the usual course of the hiring entity’s business; and
  • C: The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

To be clear, your workers will be considered employees unless you can prove, based on the elements of the ABC test above, that they should be classified as independent contractors.

Business Exemptions for the ABC Test

Some businesses are exempt and do not need to take the test. In total, there are seven categories of exemptions. Determining whether your business meets the exemption requirements can be complicated. One important note is that if your business is determined exempt from this ABC test, it would then fall under the previous case law for determining whether a person is an employee or independent contractor. Our firm can help you to determine whether you fall under one of the exemptions and, either way, we may be able to provide advice on restructuring your business if it is possible.

Contact a Fremont Business Law Attorney

When you are hiring new workers for your business, you must have clarification about each worker’s classification. The new “ABC test” in California for determining a worker’s classification as an independent contractor or employee can be confusing, but an experienced business law attorney can help you. Contact the law office of Lynnette Ariathurai online or call our firm at 510-794-9290. We serve businesses throughout Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara, CA.

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Business legal services in Silicon Valley

Two Things to Consider When Starting a Software Company

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Starting a software company is an exciting enterprise. Tech folklore is full of stories of people building billion-dollar companies from ideas that were generated in their parents’ garage. The stakes are high. Successful ideas have made some people very rich. Poorly executed ideas have left other people in debt with unsurmountable financial losses.

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Business legal services in Silicon Valley

Why Select an LLC as a Business Entity?

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Choosing the best legal structure for your business requires knowledge of your line of work and an understanding of local, state, and federal laws. Tax laws are constantly changing and the need for capital is always present, so it is crucial for business owners to evaluate which business structure offers the advantages that will save them money and help them grow. Limited liability corporations (LLC), are one of the most popular business forms for a variety of reasons including:

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Selecting the Right Business Entity When Starting a Business

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One of the most important choices you will make when starting a business is selecting a type of legal structure for your company. This decision impacts how much you pay in taxes, the amount of paperwork your business is required to complete, your personal liability, and your ability to raise money to expand or grow.

There are three primary factors that will guide the type of business entity you choose — liability, taxation, and record-keeping. Choosing the correct business entity should be a thoughtful decision. Weigh the pros and cons of each and explore how such an entity can help your business launch, expand, and grow. Business entities are not written in stone and you may change yours as circumstances dictate. 

The four most common business entities and what distinguishes them follow:

  • A sole proprietorship offers complete managerial control to the owner. As the owner you are also personally liable for all the financial obligations of your business. Of all the business entities, a sole proprietorship is the riskiest, placing your business and personal wealth in play when the business cannot pay its financial obligations.
  • A partnership is a business of two or more people who agree to share in the profits and losses of a business. Like sole proprietorships, each partner is personally liable for all the financial obligations of the business, jointly and separately.
  • A corporation is a legal entity that is separate and apart from the owners who created it. The corporation can make a profit, is taxed, and can be held legally liable for its actions. The owner’s liability for the financial obligations of the corporation are limited to the value of the shares the owners have in the corporation. Corporations are the most expensive business entity to form and maintain and have extensive record-keeping requirements.
  • A limited liability company (LLC), is a hybrid of a corporation and partnership business entity. Owners are only liable for their “shares” in the LLC and profits and losses are passed through to the owners individually without taxation of the business entity itself.

Set Up your Business, Register, and Comply with Record-Keeping Requirements

You should seek expert advice from a business attorney when considering the pros and cons of various business entities, the registration requirements in your locality, and the ongoing record-keeping requirements your business must follow at its formation and beyond.

If you are an aspiring business owner or entrepreneur, we can help you turn your ideas into actions and select the right business entity for your new business. Our experienced business attorneys can partner with you to build a lasting relationship that is mutually beneficial. Contact us today for an initial consultation. Located in Fremont, CA, we serve Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose and Santa Clara. We look forward to putting our legal experience to work for you.

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Business legal services in Silicon Valley

Attorney for Internet-Based Business

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The beauty of the Internet is that it creates online experiences that connect people worldwide to solutions or products that your company offers. And an Internet-based business can get off the ground without the big budget and deep pockets needed to launch a brick and mortar storefront. Digital storefronts are fast and nimble, and you can launch them relatively quickly without a huge investment in infrastructure for business operations.

An important partner for your Internet-based business is an experienced and competent business attorney to handle the legal affairs of your company or provide advice as it launches, grows, and expands to new products, services, markets, or business acquisitions.

Below are some best practices surrounding the topic of what new Internet-based businesses should look for when hiring a lawyer:

  • Look for an attorney you can trust. A competent, responsive, and experienced attorney in the area of Internet-based business is a great place to start. People skills, such as trust, congeniality, and relatability, are important and often overlooked considerations.
  • Don’t wait for a problem to hire a lawyer. Just because start-up costs for an Internet-based business are low relative to bricks and mortar launches does not mean that your start-up does not need a lawyer. Lawyers are invaluable for any transactions involving the government, interactions with customers, suppliers, users, employees, and the public. Specific tasks that lawyers help start-ups accomplish include:
  • Incorporation and forming a business entity
  • Hiring employees
  • Negotiating contracts with customers and suppliers, including establishing terms of service for websites and license agreements for software
  • Raising capital
  • Obtaining copyrights, patents, and trademarks

What if your legal budget is small, which priorities should you focus on?

There are certain legal tasks that must be addressed early in the development of your Internet-based business. Proper business formation, including selecting an LLC or corporation to protect you from business liability, should happen before your launch. Establishing ownership and equity rights of the company when there are multiple founders, along with their corresponding responsibilities, are the second most important tasks to resolve, early in the life of your startup.

Sort out your taxes, and determine which ones need to be paid concurrently with the posting of your income, such as sales and use taxes, as well as understanding the tax consequences of business forms. Lastly, Internet-based businesses are intellectual property. Make sure that your idea, and any software developed to run your business is legally protected and owned by the company, especially if you use independent contractors to develop software or apps.

Experience Handling Business Formations

If you are an aspiring business owner or entrepreneur seeking an attorney for starting and building an Internet-based business, we can help you turn your ideas into actions. Our Fremont business attorneys can partner with you to build a lasting relationship that is mutually beneficial. Contact us today for an initial legal consultation in Fremont, CA as well as Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara. We look forward to putting our legal experience to work for you.

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Business legal services in Silicon Valley

6 Ways to Prevent Wrongful Termination Claims

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Sooner or later, every business will have to deal with an employee claiming that they were wrongfully terminated from their job. The reality is that employers usually terminate employees for performance or due to downsizing. Whenever you must make the business decision to terminate an employee, you should be aware that the employee may file a claim or attempt to sue you.

Your company’s termination process, and how it handles employees during the termination process, very often has a direct impact on whether the employee decides to file a wrongful termination claim against your company post termination. Even when you have a clear termination policy and clearly communicate it to employees as they join the company, and follow it as the employee exits the company, a lawsuit may follow.

Here are some best practices to help you avoid wrongful termination litigation

  • Define work performance objectives.

If you make the decision to terminate an employee, it should not be a great surprise for the employee. Document the employee counseling process – from warning, to reprimand, and to suspension. Communicate the progressive disciplinary measures with expectations for improvement to the employee and document this in his or her employee file. Thus, having a system to identify performance objectives, and comparing an employee’s individual performance against those objectives, and then communicating with the employee whether they meet or don’t meet those criteria, makes the actual termination, for performance reasons, simpler and less shocking to the employee.

  • Terminate with compassion.

Even if an employee expects to be terminated from employment because of performance failures, they may still be shocked when terminated and react poorly. A termination from employment is a stressful event. Wherever possible use compassion and empathy to deliver the news while remaining firm that despite everyone’s best efforts, a separation from employment may lead the employee to find a better position elsewhere.

  • Consider liability insurance.

Because employee lawsuits against employers for wrongful termination are common, an employer should consider liability insurance, to help pay for legal fees and any potential claim for damages. Make sure you understand the available insurance options – including what is covered, whether you are permitted to select your own attorney, and whether the claims are paid per claim or per claimant.

  • Comply with all state and federal employment laws, when applicable.

Most employers do not know all the state and federal employment laws applicable to their businesses.  There are several Supreme Court cases and laws implemented during the year.  It is best for business owners to see an Employment Law attorney annually to review their policies and procedures (see below Item 5) and to know the laws applicable to their businesses. 

Make sure your company follows all the rules associated with employment promulgated by the federal Department of Labor and the State of California’s Labor and Workforce Development Agency. Posting requirements, payment of severance wages, and responding to unemployment insurance inquiries are very important.

Also, before terminating an employee, consulting with an attorney would be best practice.  Your Business Attorney will review documentation, then help clients through the termination process to minimize claims.

  • Employment handbooks.

Writing down your employment policies and procedures as well as distributing copies of the company’s employment policies and procedures to employees is the foundation of providing a defense to a claim for wrongful termination. Employees should be provided with an employment handbook at the start of their employment and required to sign a receipt indicating that they received the handbook and accept the employment policies contained in the employment handbook.

  • Train your human resources team.

Your human resources personnel should be up to date with all the labor and employment laws in California or wherever else your company maintains employees. Don’t underestimate the power of developing soft skills, like using effective and efficient communications during the onboarding and termination processes.

Develop a termination plan and related employment policies

Avoiding wrongful termination suits and defending against them if they arise are just two realities of employer-employee relationships today. Assure that your company is following all applicable state and federal laws. If you own a small business and seek assistance preparing an employment handbook and related employment policies and procedures, contact Aria Law firm, a Fremont business lawyer for an initial consultation. Counseling clients in Fremont, CA near Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara, We look forward to putting our legal experience to work for you.

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Business legal services in Silicon Valley

Why Use a Fictitious Business Name?

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Choosing a unique business name is one of the most important decisions a business owner makes when establishing a new enterprise. Your business name is the foundation of your brand. It provides an identifying mark that tells your customers who you are and what type of product or service you offer. A poorly chosen business name may bring negative attention from the marketplace and has the power to kill your venture before it properly takes off.

When a business would like to operate with a name that is different than the name used to form the business, then a fictitious name is required.

A fictitious name is an excellent way of setting up a boundary between you and your business venture. Fictitious business or trade names are known as a “DBA,” which means “doing business as”.  In addition, you may manage many “DBA’s” under the same original legal entity for different businesses you may manage.

Details about Setting up a California DBA

  • A DBA must be filed under a unique name and your selection should be researched in the local county clerk’s office or recorder’s office
  • Certain words cannot be part of your DBA, such as “incorporated”, “LLC”, “corporation” and others
  • A sole proprietor may not need a DBA if they intend to use their surname in the business name
  • DBA statements must be published in a local newspaper within 30 days of filing for your DBA

Advantages of Operating Under a DBA

  • Low up-front costs. A DBA requires low upfront costs.  You can register a trade name with the Division of Corporations and your business can open its doors for a nominal fee with few compliance requirements (besides business entity and state registration, as required).
  • Quick market entry. A DBA allows companies to rapidly maximize business potential by locking down a name and branding without the fear of another market entrant claiming it.

Where to Get Help

If you want to operate your company under a fictitious business name you must register with the appropriate county and state authorities. A California business lawyer can help you file and register a DBA or trade name. It is important that you understand what liability protection is available to you when establishing a DBA.  To receive personal protection of your assets, your company will need to file and register a corporation.

If you are a business owner in the East Bay Area including Fremont, CA near Newark, Hayward, East Bay Milpitas, Union City, San Leandro, Gilroy, San Jose or Santa Clara, seeking legal guidance on how to establish a trade or fictitious names, look no further than a California business lawyer who can provide legal advice and counsel.

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Business legal services in Silicon Valley

Business Websites Need to be ADA Accessible

Websites Need to be ADA Accessible

A web presence is necessary in today’s business world for companies large and small. In this article, we not a recent federal decision in the Second Circuit is a reminder that restaurants, and other businesses that may interface with the public, have additional responsibilities under the places of public accommodation provisions of the American with Disabilities Act (ADA).

In this New York case, a blind woman, Cheryl Thurston, who relies on a screen reader to interact with websites was unable to read the menu on a restaurant’s website using her screen reader. She was unable to do so because the restaurant’s website was not designed to permit access using a screen reader. Ms. Thurston sued the restaurant for violations of Title III of the Civil Rights Act of 1964 (Title III) and the ADA.

United States federal law requires public accommodations to be accessible to all people, including the blind, and prohibits discrimination on the basis of “race, color, religion, or national origin.” The definition of public accommodation within the Title III of the Civil Rights Act of 1964 includes “any inn, hotel, motel, or other establishment which provides lodging to transient guests.” The other establishment provision referenced here includes restaurants.

The trial court granted summary judgment in favor of the woman, finding that the restaurant’s website fell within the category of “services …privileges, advantages, or accommodations of” a restaurant, which is a place of public accommodation under the ADA. In short Ms. Thurston proved that the restaurant’s website was inaccessible to blind users. The court issued an injunction mandating the restaurant complies with the current version of the Web Content Accessibility Guidelines (WCAG) published by the World Wide Web Consortium, a non-governmental international agency that sets the standards for the worldwide web.

The restaurant appealed the decision. The court of appeals affirmed the lower court’s decision holding that the trial court properly found that Title III of the ADA applied to the restaurant’s website. However, like the trial court, the court of appeals declined to declare that the restaurant was in violation of the ADA for not previously having implemented the standard. The restaurant is required to comply with WCAG 2.0 guidelines to make its website accessible to disabled people.

Why the Thurston Decision Matters

The decision in the Thurston case will have far reaching effects on many businesses, not just restaurants. In the past, to maintain a lawsuit alleging a violation of the ADA, a business patron would have needed to physically go to the business and be able to describe in the complaint what he or she “saw” that made the business non-compliant with the ADA. Now, all a business patron needs to do is try to engage with your business’ website.

Key Takeaways for Your Business’ Website Regarding ADA Accessibility

Businesses with websites should immediately investigate whether their websites are ADA compliant. Check with your website designer, webmaster, or advertising agency for guidance on how to comply with the WCAG guidelines to make your website ADA compliant.

Unfortunately, prior to implementing this change to your website, your business may get hit with a lawsuit or receive a threatening letter from an attorney about a lawsuit. Small businesses often wind up paying $5,000 or more to make the claim go away, which could increase your compliance costs substantially.

If you own a business in the East Bay Area including Fremont, CA near Newark, Hayward, Milpitas, Union City, San Leandro, Gilroy, San Jose or Santa Clara and you are seeking legal guidance on how to make your website ADA compliant or need counsel to represent your business threatened with a lawsuit for ADA non-compliance, get legal advice from a California business lawyer today.

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Business legal services in Silicon Valley

New Wildfire Smoke Employment Requirements for California Businesses

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On July 29, 2019 California’s Occupational Safety and Health Standards Board issued emergency regulations to protect outdoor workers from the harmful effects of wildfire smoke. The emergency regulations are in response to the wildfires that have plagued the state in the last several years. Employers are now required to monitor levels of smoke at workplaces or worksites and take protective action in response to changed conditions that put worker safety in jeopardy. The new emergency regulations are effective through January 28, 2020, with two potential 90-day extensions, until the permanent rule is effective sometime in 2020.

Affected Employers

For the most part, workplaces at which the air quality index reaches a certain level are required to comply with these emergency regulations. Employers must monitor air quality, and when it reaches or is expected to reach a dangerous level, reduce their employee’s exposure to smoke. Affected industries include agriculture and construction; occupations like delivery, maintenance, and landscaping workers; and even retail locations, like restaurants and banks, where outside doors are opened throughout the day by patrons. There are exempt employees, such as firefighters fighting a wildfire and workers inside buildings or vehicles with mechanical ventilation, for example.

Communication and Training Requirements

Employers are required to update, communicate, and train employees about wildfire smoke and these health and safety regulations. Employers should consult with an employment lawyer to update workplace policies and employment handbooks to reflect these new regulations.

Next Steps

California businesses must comply with these new health and safety regulations. The first step, however, is to investigate if your business is required to comply with these rules. To learn if your business is exempt from the new regulations, contact an employment law attorney. Secondly, employers will need to create policies and procedures to satisfy the planning, education, and training components of the regulations.

Wildfires are disruptive to employers and employees alike. Like other natural disasters, you must anticipate your wildfire response to maximize employee safety while minimizing disruption or intervention into the work of your organization.

Employers should meet with an employment lawyer at least once a year regarding new laws or changes to regulations that might impact their business. Employment handbooks should be reviewed annually, and updated at a minimum every three years. It is important to keep current and comply with federal, state, and local labor and employment laws to protect your company and employees. If you are a business in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, or Santa Clara, California, consult legal counsel today to learn how to bring your business in compliance with the new emergency regulations to protect employees from wildfire smoke.

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Business legal services in Silicon Valley

Why Might a Business Incorporate in Delaware Instead of California?

Classified Board of Directors

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Many of the largest public companies in the world are incorporated in Delaware. California business owners ask me whether they should incorporate in Delaware when choosing a state of incorporation for a business about to go public. This post will examine some of the key differences between incorporation and corporate governance laws in California and Delaware.

Under Delaware law, corporations are permitted to have a classified board of directors, with each class having a term of longer than one year. Whereas, a non-public California corporation requires annual election of its board of directors.

Cumulative Voting for Directors

Delaware law permits cumulative voting for directors, so long as this provision is included in the company’s certificate of incorporation and/or its bylaws. California law is more expansive with respect to cumulative voting. By default, cumulative voting is available to shareholder elections of directors and it need not be specified in the articles of incorporation or bylaws. Cumulative voting is considered a statutory right for shareholders of non-publicly traded corporations, unless specifically excluded in the company’s articles of incorporation and/or its bylaws.

The Right of Stockholders to Call Special Meetings of Stockholders

Stockholders are only permitted to call special meetings if the company’s certificate of incorporation or bylaws authorizes it under Delaware law. In California, on the other hand, not only may a special meeting of shareholders be called by the holders of 10% or more of the voting stock of the corporation, but this right may not be waived by the shareholders in the company’s certificate of incorporation or bylaws.

Insulation of Directors

California permits unlimited monetary liability for directors upon a finding of breach of fiduciary duty. Delaware law provides a complete shield to directors from monetary liability for breach of fiduciary duty except in circumstances in which a stockholder can demonstrate a breach of the duty of loyalty, a failure to act in good faith, intentional misconduct, or a knowing violation of law, among other violations.

Predictability Surrounding Corporate Outcomes

In Delaware, both the legislature and the courts work in concert to act quickly and effectively to meet changing business needs. Corporation law in Delaware is one of the most extensive and well-defined bodies of corporate law in the United States. The Delaware Court of Chancery is renowned for its sole focus on business and corporate law, no backlog, and a knowledgeable bench in resolving complex corporate issues. 

If you are starting a business in California, or own an existing business in the East Bay Area including Fremont, Newark, Hayward, East Bay Milpitas, Union City, San Leandro, Gilroy, San Jose, or Santa Clara and you are seeking to explore incorporating in California or Delaware, you will need to ensure that the right steps are taken for incorporation. Seek legal advice and counsel from a knowledgeable California business lawyer today, call us at 510-794-9290.

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