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Employees vs. Contractors in Construction – Labor Designation

Construction is a labor intensive business. All companies in the construction industry should have a well-designed structure in place for handling their workforce. Some work may be performed by contractors instead of employees and there are strict rules and regulations regarding worker classification. Improper labor designation could lead to big problems. Here, our Fremont employment law attorney explains the key things business owners and companies in the construction industry need to know about the employee vs. independent contractor labor designation in California.

Employees Must be Properly Classified

As a starting point, all construction company owners and operators must understand that their workers need to be properly classified – either as an employee or independent contractor. A company that improperly classifies workers in California can face serious sanctions and criminal charges. Here is an overview of California’s employee and contractor designations:

  • Employee: An employee is an individual who performs duties dictated or controlled by others and is paid a regular wage or salary.  This would include all workers who do not have a CSLB license, or another qualified California professional license.
  • Contractor: A contractor is a CSLB licensed self-employed individual or worker from another company who provides services based on a written contractual agreement.

A benefit of using contractors instead of employees is that employers are not responsible for certain costs, including things like workers’ compensation insurance, and other benefits that may be offered to an employee, ie: paid sick leave, etc.

Know the Law: California’s ABC Test for Worker Classification

Our state has some of the most comprehensive, employee-friendly worker classification standards in the country. As explained by the California Labor and Workforce Development Agency, the state uses the “ABC test.” It was codified into law in 2019 by Assembly Bill 5. Here are the three key points that would designate a worker as a contractor, given that all three are met:

  1. The worker is free from the control and direction of the hiring entity (construction company) in connection to the performance of the work.
  2. The worker performs work that is outside the usual course of the construction company’s primary course of business.
  3. The worker must customarily engage in an independently established trade, occupation, or business of the same nature that they are doing for the construction company.

Most workers fail B. above.

Here is a simple example of how a construction company can hire an independent contractor. Imagine that your company needs a modest amount of plumbing work done for a project in the Bay Area. You hire a CSLB licensed self-employed plumber to complete that specific task with a written independent contractor agreement.  In most cases, that plumber can be hired as an independent contractor. He or she does not have to become an employee of your business.

We Help Construction Companies Navigate Labor Designation Regulations

We are a law firm that represents businesses and business owners in California. In doing so, we are experienced in working with construction companies. Our team assists clients to:

  • Ensure compliance (prevent claims): We help your construction company remain compliant with labor laws—thereby reducing the risk of costly legal claims. Our attorney provides thorough audits of your current labor practices, ensuring that each worker’s classification aligns with California state laws. We take a proactive approach, helping our clients prevent claims through proper worker classification practices.
  • Independent Contractor Agreements.  We draft Independent Contractor Agreements for our clients to use to hire licensed CSLB contractors from time-to-time.
  • Navigate complaints (defend claims): Should your company face claims of misclassification, our team is prepared to defend your practices. We offer expert legal defense that includes gathering necessary documentation, representing your interests in legal forums, and negotiating on your behalf. Our strategies are tailored to present a robust defense, demonstrating that your labor practices are compliant with current laws.

Contact Our California Business Law Attorney for Construction Companies

Lynnette Ariathurai is an experienced and solutions-focused advocate for employers, including companies in the construction industry navigating employee vs. contractor labor designation issues. Contact us today to arrange your confidential consultation. With an office in Fremont, we work with construction companies throughout the Bay Area.

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Considerations When Buying a Construction Company

The California Construction and Industrial Materials Association (CalCIMA) cites data showing the construction industry generates nearly $35 billion in revenue in our state each year. There are a lot of options for entrepreneurs in construction; you may be considering purchasing a construction company. Here, our Fremont attorney for buying a business highlights key considerations to keep in mind when buying a construction company in California.

Research the Market, Develop a Business Strategy

Before purchasing a construction company, thorough market research is essential. As a starting point, prospective buyers should be sure to understand the current market conditions—such as the demand for construction services, competition, and the economic trends in your target region. This knowledge will guide your decisions throughout the purchase process and help you identify the company that best aligns with your long-term objectives.

Know Your Options to Structure a Construction Business Purchase

How are you going to structure this business purchase? It is an important consideration. There are three general options available when buying a contractor business in California:

  • Stock purchase: In a stock purchase, the buyer acquires the selling company’s stock directly from the shareholders. In effect, the buyer obtains full ownership over the legal entity. Notably, this method includes assumption of all assets and liabilities.
  • Asset purchase: With an asset purchase, a buyer selects specific assets and liabilities they wish to acquire from a business, rather than taking over the entire entity. In some cases, this approach can minimize risk as the buyer can avoid inheriting unwanted liabilities.
  • Business Purchase.  Provided you have a California State License Board (CSLB) licensed contractor, you may want to purchase the licensed business, which would include using the same tax ID and credit of the business, same license, but you take the business “as is” with all its assets and debts.  There may be known and unknown risks in this approach, but you do not have to wait for a new entity license from CSLB.

Whether a stock purchase, business purchase or asset purchase makes more sense when buying a construction company is highly case-specific. An attorney can help you weigh your options and provide legal assistance in minimizing the risks.

Ensure You can Obtain All Required Licenses

Licensing is a critical issue that must be addressed when buying a construction company or any type of contractor business in California. The state requires construction firms to hold valid licenses for the specific types of work they conduct. It should be noted that an individual contractor’s license is not transferable in California.  However, an entity license may be transferred in two of the above options.  As such, the new owner of a construction company may be required to either obtain their own license through the Contractors State License Board (CSLB) in an Asset Purchase, or possibly transfer the license with a Stock Purchase or Business Purchase. An Attorney can assist you with either the license application or change of an existing license as required by CSLB.

Perform Comprehensive Due Diligence

Conducting comprehensive due diligence is a must when purchasing a construction company in California. The process should encompass an assessment of all financial records, including debts, assets, revenue streams, and profitability. Beyond that, you should evaluate the company’s client base, project pipeline, and the status of ongoing contracts to understand the company’s operational health. Finally, legal due diligence is also important. You should check for any ongoing litigation, compliance with employment laws, and the validity and transferability of contracts. An attorney can help.

Contact Our California Attorney for Buying a Construction Company Today

Lynnette Ariathurai is a business lawyer with the experience to advise clients buying a construction company. Contact us now for a confidential initial appointment. From our Fremont office, we help entrepreneurs buy businesses throughout the San Francisco Bay Area.

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Compensation Structures in Veterinary Practices

Know the Legal Structure of Veterinary Practices in California

As with other types of businesses, veterinary practices must have the right legal foundation to thrive. Under the California Veterinary Medicine Practice Act, veterinarians cannot form their business as a partnership or a limited liability company (LLC). Instead, group veterinary practices should be set up as a professional corporation (PC). The PC structure offers some important legal advantages, including liability protection and the ability to be taxed as an S corporation.

The Most Common Ways to Structure Pay for Veterinary Professionals in Group Practices

Within a group practice that is established as a PC in California, there are a few different approaches for structured compensation packages for veterinarians, including: 

  • Veterinary compensation based on individual collections: One common approach for compensation is to base it on individual collections. With this, veterinarians are paid as a percentage of the revenue that they personally generate.
  • Veterinary compensation based on group collections: Another prevalent method is compensation based on group collections. With group collections, revenues are pooled and distributed among veterinarians according to predefined criteria.
  • Hybrid model (compensation based on both): Of course, you do not have to choose between one compensation structure or the other. Many group veterinary practices in California use some form of a hybrid model—with both individual and group collections being used to determine compensation.

What to Know About Veterinarian Compensation and Professional Ethics

The Stark Law and California anti-kickback regulations strictly restrict certain compensation methods for physicians. With limited exceptions, doctors are barred from self-referrals and restricted from receiving “kickbacks” for recommending certain products and services. Veterinarians in California are not subject to the same laws. However, the California Veterinary Medical Board—which regulates professional ethics—could take adverse action against a group veterinary practice that has a compensation structure that violates state law. 

Why Rely on a Bay Area Business Law Attorney?

Determining a compensation structure for your veterinary practice is complicated. Our founder and managing attorney Lynnette Ariathurai caters specifically to business owners. We are proactive. Along with other measures, our California business lawyer for veterinary practices will:

  • Hear what you have to say and answer your questions about compensation structure
  • Gather and prepare all financial documents, records, and supporting information
  • Help you determine the best compensation structure for your veterinary practice

Contact Our California Business Lawyer for Veterinarians Today

Lynnette Ariathurai is a business lawyer for veterinarians. If you have any questions about compensation structures for veterinary practices, our legal team can help. Contact us today to arrange your confidential initial appointment. From our Fremont office, we provide business services to veterinary practices across the Bay Area.

To set up a confidential, no obligation consultation with a top-tier California business attorney, please contact us today.

California veterinary practice, vet practice, veterinary practice legal advice

Building a Group Practice Nursing Business

Nurses are indispensable to healthcare in the United States. The more than 525,000 actively practicing registered nurses (RNs) in our state work hard to ensure patients get proper care (California Board of Registered Nursing).

If you are a registered nurse considering building a business, it is crucial that you put the proper structure in place. These ideas from a Fremont, CA business attorney provides a comprehensive overview of the key things to know about building a group nursing practice in California.

Select the Appropriate Entity for Your Group Nursing Practice

The California Nursing Practices Act is a set of state laws/regulations that govern nursing. It outlines the process for licensure, the scope of practice, and even disciplinary procedures. California’s corporate law also regulates nursing practices. You will need to select your legal entity when building a practice. For most group practices in nursing, the best option is:

  • Professional nursing corporation: A professional nursing corporation is a legal entity structured under state law that allows registered nurses to offer nursing services through a corporate organization. There are many advantages to forming a professional nursing corporation, including tax advantages and liability protection.

A note on California law: There are strict requirements regarding professional nursing corporations in California. While several different licensed medical professionals may have an ownership stake. a registered nurse(s) must own at least 51 percent of the business.

What You Need to Do to Build a Group Nursing Practice in California

As with any other type of business in the health care industry, a nursing practice needs a strong foundation. Here are some key things to do when building your group nursing practice in California:

  • Select a name (naming convention): You need to select a name that meets state naming conventions. Both the official and the DBA name should have “nursing” in it.
  • Negotiate ownership and structure: Negotiating ownership and structure is another major step. Along with other things, it typically involves deciding who the shareholders will be, determining the percentage of ownership, and structuring the company in a way that both meets California legal requirements and the needs of the parties.
  • File articles of incorporation: Filing articles of incorporation with the California Secretary of State is necessary to legally establish your professional nursing corporation. The document outlines basic information about the corporation, including its name, purpose, the agent for service of process, and the initial directors.
  • Develop corporate bylaws: Corporate bylaws are the internal rules that govern the corporation’s operations, including the roles and responsibilities of the directors and officers, meeting protocols, and procedures for making major business decisions.

Building a successful nursing practice is complicated. Do not try to figure everything out alone. An experienced business attorney can help you protect your individual interests and put the best business structure in place.

Get Help from a California Business Lawyer for Nursing Practices

Lynnette Ariathurai is a business attorney experienced in medical practice structures. If you have any questions about building a group nursing practice, she can help. Contact Ms. Ariathurai today for a confidential consultation. From her Fremont office, we provide business services to group nursing practices throughout the Bay Area.

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Understand the Regulations Surrounding Employee Recruitment and Hiring in California

Businesses and organizations make major investments into finding, recruiting, hiring, and training employees. If a direct competitor tries to swoop in and take all your qualified staff, it could cause serious harm to your business. California law provides some limited legal protection in this scenario—but employee poaching is technically not a prohibited practice. In this article, our Fremont business law attorney provides an overview of the key things companies should know about the regulations surrounding employee recruitment and hiring in California.

Know the Law: California is an At-Will Employment State—But Workplace Raids are Banned

Businesses in California are right to be worried about protecting their human capital. Companies make tremendous investments into training employees. A competitor may try to come in and take your qualified staff. At the same time, California is an “at-will” employment state. Employees can leave a company for any reason. The law does not stop them from joining a competitor.

In fact, California allows businesses to recruit directly from competitors. State law does not specifically ban the practice of employee poaching—whereby businesses actively seek out and hire workers from their competitors. As frustrating as it can be to deal with a competitor that is recruiting your employees, it is not an unlawful practice.

With that being said, there is an important limit: California does bar workforce raids. That is viewed as an anti-competitive, monopolistic practice. A competitor that attempts to raid your staff—meaning they aggressively try to hire many (or all) of your employees at once—may be in violation of state law. A workforce “raid” is distinct from lawful hiring recruitment.

The Best Legal Strategy to Protect Against Employee Poaching: Employment Agreements

Employers are not entirely helpless against the forceful recruiting of their staff. One of the best approaches to safeguard against employee poaching is to use well-written employment agreements. These contracts should clearly outline the terms of employment—including job responsibilities, salary, benefits, and duration. A contract may be structured so that an employee is strongly (financially) disincentivized from joining a competitor for a predetermined time.

In California, businesses should avoid including non-compete provisions within an employment agreement. Non-competes are not enforceable in California. Indeed, in September of 2023, California Governor Gavin Newsom signed Senate Bill 699 into law—legislation that further expands the state’s ban on non-compete agreements. In other words, an employment agreement cannot directly bar an employee from joining a competing firm in the future.

The bottom line on understanding the regulations surrounding employee recruitment and hiring in California: the state allows competing businesses to recruit directly from each other’s staff—as long as they avoid anti-competitive mass “raids.” Companies can use employment agreements to help retain their staff.

Get Help from Our Fremont, CA Business Law Attorney Today

Lynnette Ariathurai is a business lawyer with considerable experience helping companies navigate California’s employment, recruitment, and employee poaching laws. If you have questions about your rights, your options, or protecting your employees, please do not hesitate to contact us today. With an office in Fremont, we work with businesses throughout the Bay Area.

California employment laws, employee poaching, employment agreements, workforce raids

Stealing Employees from a Medical Practice in California (Know the Law)

Medicine is a highly competitive field in the Bay Area. The Medical Board of California reports that there are nearly 170,000 licensed doctors in the state. There are many thousands of professional practices. This raises an important question: Can medical practices in California protect their competitors from stealing employees? The short answer is that our state has very limited regulations to protect business, but medical practices have some options for keeping staff. Here, our Fremont business lawyer for medical practices highlights the key things you should know about the laws around stealing employees from a competing business in California.

What Medical Practices Should Know About California Law on Stealing Employees

The most important piece of background information for medical practices to understand is that California is an at-will employment state. Either the employer or the employee can end their working relationship at any time for almost any reason, except for an illegal reason. Further, there is no employee poaching statute in California. Quite the contrary, a medical practice can lawfully recruit and hire the employees of a direct competitor.

That being said, there are limits. Most notably, the law strictly prohibits large-scale workplace raids of a competing business. It is a violation that occurs when a business—including a medical practice—intentionally targets another business and tries to hire away a significant number of its staff all at once to undermine that competing firm.

Medical Practices Can Use Employment Contracts to Protect Staff

While the law does not prohibit general employee “stealing” by competing business, there are proactive steps that medical practices in California can take to protect the investment that they made in finding, building, and training their staff. The best option is generally a well-drafted employment agreement. These contracts outline the terms and conditions of an employee’s relationship with the medical practice. While non-compete agreements are not valid in California, an employment agreement could help to keep your staff in place. It may require advance notice and/or the repayment of certain bonuses if your employee leaves the practice before the end of their agreement.

A Medical Practice in California May Protect Proprietary Business Information with an NDA

Although California medical practices ultimately have somewhat limited options for stopping an employee from joining a competitor, they have far stronger options for protecting their sensitive business information. A non-disclosure agreement (NDA) can provide much needed protection if an employee had access to proprietary information about your medical practice. An NDA is a legal document that requires employees to keep certain information confidential for a predetermined period.

Contact Our California Business Lawyer for Medical Practices Today

Lynnette Ariathurai is a top-tier business attorney with extensive experience working with medical practices. If you have any questions about California law regarding the stealing of employees from a competing medical practice, we are here to help. Contact us today for a completely confidential initial case review. From our Fremont office, our firm serves clients throughout the Bay Area.

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Legal Controls for a Group Medical Practice in California (Part I)

The California Hospital Association defines a group practice as a “medical practice comprised of two or more physicians organized to provide patient care services.” All group medical practices need a strong, well-developed legal structure plan. Understanding the role/responsibilities of the different players in the business is essential. In part one of this series, our Bay Area medical practice law attorney discusses legal controls for group medical practices in terms of shareholders, partners, the board of directors, and managing partners. 


In California, a medical practice will generally be formed as a Professional Corporation (PC) under the state’s Moscone-Knox Professional Corporation Act. As a rule, a person must be licensed in the practice of medicine to be eligible to be a shareholder for a group medical practice.

Shareholders in a medical practice are typically the owners of the company. They have invested capital into the practice and, as a result, hold a vested interest in its success. Shareholders often have the power to vote on major decisions affecting the practice.

The rights and responsibilities of a shareholder in a group medical practice will depend, in part, on the structure of the business, including their stake in the company. A majority shareholder will have far more influence than a shareholder who owns a small stake.

The Board of Directors

The Board of Directors is responsible for the strategic direction and oversight of the medical practice. Members are often elected by the shareholders—and, in many cases—are shareholders themselves. Key responsibilities of the Board of Directors typically include establishing governance policies, ensuring the practice adheres to legal standards, financial oversight for the business, and strategy planning.

Managing Partner

The managing partner of a group medical practice is a person in a key leadership role. Most often, the managing partner is a senior physician who owns a significant stake in the business. The role of managing partner typically blends clinical medical expertise with strong business skills. Business leadership is important to ensure effective management of the medical practice’s operations.

  • The managing partner of a medical practice who is often the individual responsible for overseeing day-to-day operations and ensuring that the practice runs smoothly

Not just anyone can serve as the managing partner for a group medical practice In California. The role is highly regulated due to our state’s strict adherence to the Corporate Practice of Medicine (CPOM) doctrine. A medical practice must be owned and managed by licensed physicians—as such, the managing partner must be a licensed doctor.

Contact Our Bay Area Business Law Attorney for Group Medical Practices Attorney

Lynnette Ariathurai is a top-tier, solutions-driven advocate for clients. With extensive experience representing group medical practices, we have professional knowledge that you can rely on for questions about legal controls. Contact us today to set up your confidential consultation. From our Fremont law office, we work with group medical practices through the Bay Area.

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Compensation Structures in Medical Practices

Three are approximately 120,000 licensed physicians who are actively practicing in the state of California. Health care is a highly regulated, ultra-competitive industry. A medical practice needs the right foundation to succeed—and that includes a well-considered compensation structure for physicians. Here, our Bay Area medical practice lawyer provides an overview of the most common compensation structures for medical practices and discusses some issues to consider.

Understanding Compensation Structures for Medical Practices in California

Whether you are building a medical practice from the ground up or adding a new physician to an existing group practice, it is imperative that you have a comprehensive structure in place for compensation. In California, compensation structures for doctors often fit into one of the following three broad categories:

●  Physicians paid based on their own collections: In California, a common compensation structure for medical practice is paying physicians based on their own collections. A pro is that this model incentivizes individual performance—as a physician’s pay is directly tied to the revenue they generate through patient services. However, a con is that it can sometimes create vast disparities among physicians in a group practice.

●  Physicians paid a percentage of group collections: Alternatively, some practices adopt a model where physicians are paid a percentage of the group’s total collections. An advantage is that this approach fosters a more collaborative environment, as all practitioners contribute to and benefit from the group’s overall success. A potential downside is that this type of compensation model might diminish the motivation for high performance.

●  A hybrid model of physician pay: A hybrid model combines individual and group performance metrics to determine compensation. The structure aims to balance personal initiative with team collaboration. Physicians are rewarded for their individual contributions as well as their participation in the collective success of the practice. However, this type of model can be complex to administer.

What to Know About Federal and State Regulations for Physician Profit Sharing

A physician in California can be compensated, fully or partially, based on profits ensured by a group medical practice. That being said, any profit-sharing arrangement used to compensate a licensed doctor must comply with all applicable state and federal regulations, including the Stark Law and the federal anti-kick back statutes. Here is a basic overview of these regulations:

  • Stark Law: Named after Congressman Pete Stark, this is a federal law that prohibits physician self-referral. Specifically, it forbids doctors from referring Medicare or Medicaid patients to entities with which they or their immediate family members have a financial relationship—unless one of the narrow legal exceptions applies. This law aims to prevent conflicts of interest in physician referrals and ensure that medical decisions are based on patient need rather than potential financial benefits for the referring physician. Notably, California has a state-level version of the Stark Law, known as the “California Physician Self-Referral Law.” The law extends the principles of the federal Stark Law to services payable by any source, not just Medicare or Medicaid.
  • Federal Anti-kickback Statutes: The federal anti-kickback statute is a U.S. law that prohibits the exchange of anything of value in an effort to induce or reward the referral of federal healthcare program business—including Medicare and Medicaid. It aims to prevent healthcare providers from making medical decisions based on personal financial gain. Violations of this law are considered felonies and can result in significant penalties, including fines and imprisonment, as well as exclusion from participating in federal healthcare programs.

When a group medical practice in the Bay Area sets up a compensation system for its physicians, it is imperative that they do so in a manner that does not run afoul of the Stark Law, the California physician self-referral law, or federal anti-kickback statutes. A business lawyer with experience working with group medical practices can help your company put the right structure in place.

Allocation of Expenses is an Important Issue and May be Challenging to Calculate

As part of the process for developing a compensation model for a group medical practice in California, it is important to consider the allocation of expenses. Expenses matter to a business as much as revenue generated. Some key factors that must be evaluated include:

●  Overhead: Understanding and allocating overhead costs is crucial in any compensation model. These expenses include rent, utilities, insurance, and equipment. Properly attributing these costs ensures financial fairness and transparency within the practice.

●  Staffing/managers: Staffing costs, including salaries for support staff and managers, represent a significant portion of practice expenses. Equitable allocation of these costs among physicians is essential for a fair compensation model.

●  Practice vs. personal: Finally, distinguishing between practice-related and personal expenses is vital. Personal expenses, such as individual professional development or specific equipment, should be clearly differentiated from general practice expenses.

Contact Our California Business Lawyer for Medical Practices Today

Lynnette Ariathurai is a business law attorney with extensive experience representing medical practices. If you have any questions or concerns about the right compensation structure for your medical practice, we are here to help. Contact us today for a strictly confidential, no obligation consultation. From our office in Fremont, we work with medical practices throughout the Bay Area.

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Estate Considerations When a Doctor Dies

We Help Businesses Navigate the Estate Considerations When a Physician Dies in California

When a still-practicing doctor passes away, it will cause serious complications for their business. It is imperative that physicians who own a professional practice have a proper business estate plan in place. Lynnette Ariathurai is an experienced business lawyer for medical practices. Our firm provides solutions-focused legal representation to clients. If you have any questions about estate considerations when a doctor dies, we are here to help. Contact our Fremont law office today for a strictly confidential consultation with a California business lawyer for medical practices.

Why It Matters: Death of Doctor Will Radically Alter the Course of a Business

Of course, estate planning is key for personal reasons. A well-planned estate can help make things easier for family and other loved ones. For doctors who own their own practice in California, there are also major business considerations. The unexpected death of a doctor can send shockwaves through a medical practice. Addressing these challenges requires a proactive and well-developed estate plan for the business.

California Law Requires Medical Professionals to Own/Operate a Medical Practice

In California, the ownership and operation of a medical practice are strictly regulated. Under the state’s Moscone-Knox Professional Corporation Act, only licensed professionals can own and manage a medical corporation. In other words, heirs or estate executors without medical licenses cannot directly continue the operations of the deceased doctor’s practice on their own. It is crucial that there is a plan in place for another doctor—whether a doctor already in the practice or a doctor who owns a separate practice—to assume control of the business.

A Buy-Sell Agreement is a Key Estate Planning Tool for Protection of the Business

One essential estate planning tool for doctors in California is the buy-sell agreement. This legally binding contract details the process for the remaining partners or specified individuals to purchase the deceased’s interest in the business. It can set the valuation method for the practice, ensure there is a source of funding, and put other conditions in place for a potential sale or transfer.

California Law Requires Notification of Patients by a Successor-in-Interest

When a doctor passes away, their patients’ continuity of care is a paramount concern. California law mandates that within 30 days of the doctor’s death, a notification must be sent to patients by the successor-in-interest or the person who takes responsibility for the business. The notification should provide basic guidance for patients for obtaining their medical records, finding alternative care providers, and/or transferring their care to another medical practice.

Estate Considerations are Complicated: How a Business Attorney Can Help

Business planning is complicated—especially when it comes to estate considerations after a doctor has passed away. An experienced business law firm helps clients put proactive business estate plans in place for their medical practices—including buy-sell agreements. We offer business law guidance to medical practices that are already dealing with the unexpected passing of a doctor.

Contact Our California Business Lawyer for Doctors

Lynnette Ariathurai is a top California business lawyer with extensive experience working with medical practices. Have questions about estate considerations after a doctor’s passing? We are here as a resource. Contact us today for your confidential initial consultation. We help medical practices with business-related estate planning throughout the San Francisco Bay Area.

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Buy-Sell Agreements for Medical Practices

We Help Medical Practices with Buy-Sell Agreements in the Bay Area

Do you own and operate a medical practice in California? If you share ownership rights with any other party, it is imperative that you have a well-drafted buy-sell agreement in place. It is important to hire a solutions-driven business lawyer with extensive experience advising medical practices. If you have any questions about buy-sell agreements, we can help. Contact us at our Fremont law office today to set up your confidential, no obligation initial consultation.

What is a Buy-Sell Agreement?

A buy-sell agreement (buyout agreement) can be a contract between co-owners of a business. Most often, the agreement lays out the procedure under which the shares of a departing owner will be distributed or sold if they decide to exit the business due to various reasons—such as death, disability, or retirement.

Why Buy-Sell Agreements Are So Important for Medical Practices in California

While many business owners can benefit from a buy-sell agreement, these types of contracts are especially vital for medical practices. California law mandates that a medical practice must be owned and operated by a licensed medical professional (Moscone-Knox Professional Corporation Act). If a physician partner suddenly departs, another licensed professional must own the business. The practice cannot be directly transferred to most other parties—such as a non-physician spouse. A well-drafted buy-sell agreement helps to ensure a proper transition plan is in place.

A Buy-Sell Agreement Should be Customized to Meet the Needs of a Medical Practice

Every medical practice has its unique dynamics, professional relationships, and future aspirations. As such, a generic, one-size-fits-all buy-sell agreement can lead to complications down the road. It is crucial that the agreement reflects the individual needs and circumstances of the medical practice.  Especially taking into consideration the assets and liabilities of the practice. You will want to make sure that you address any unique issues related to your practice.

Key Elements of a Well Drafted Buy-Sell Agreement

Although every buy-sell agreement should be customized to meet the needs of the medical practice, there are some key issues that should always be considered and addressed. Here are some of the most important elements that you will find in a typical buy-sell agreement:

  • Valuation: Parties should define how the practice will be valued—whether through a predetermined formula or by a specified third-party professional.
  • Trigger: The contract should clearly state the situations (death, disability, retirement, etc.) that will activate the buy-sell provisions.
  • Funding: A properly drafted agreement will explain how the buyout will be funded—whether through insurance, personal funds, or outside financing.

We Help Medical Practices Negotiate and Draft Buy-Sell Agreements

Buy-sell agreements for medical practices are complex contracts. It is imperative that you have the right agreement in place for your business. Our law firm negotiates, drafts, and reviews buy-sell contracts for medical practices in California. We will ensure that any contract that you sign properly protects your legal rights and financial interests.

Contact Our California Business Lawyer for Medical Practices

Lynnette Ariathurai is a business law attorney for medical practices who has extensive experience with buy-sell agreements. Contact us today for your confidential consultation. We help medical practices with the negotiation, drafting, and review of buy-sell agreements throughout the Bay Area.

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