Author: Alissa Gutierrez

Forming a Professional Nursing Corporation in CA

Nursing is one of the most important occupations and the workplace environment is changing rapidly. According to data from the California Board of Registered Nursing, there are more than 487,000 active registered nurses (RNs) in the state. If you are considering starting a nursing company in California, it is crucial that your business has the right legal structure. A nursing corporation is a specialized type of business entity designed for firms offering services within the nursing profession. Here, our Fremont business formation lawyer highlights the key things to know about professional nursing corporations in California.

Know the Law: Professional Nursing Corporations in California

In California, a professional corporation (PC) is a specialized type of legal entity through which certain licensed professionals can conduct their business operations. Under California law (Cal. Corporation Code § 13401(b)), PCs are required to register with the state agency that is responsible for regulating the specific profession in question. A professional nursing corporation is required to register with the Board of Registered Nursing. Notably, not just anyone can form a professional nursing corporation in California. There are strict ownership requirements. At least 51 percent of the corporation must be owned by registered nurses in California. The remaining 49 percent can be owned by other specific licensed professionals in the health care field.

What are the Benefits of Forming a Nursing Corporation? 

A PC is generally the most efficient and effective way to operate a nursing business in California. Some key advantages of operating a nursing services business as a professional nursing corporation include:
  • Tax savings—a professional corporation can reduce a nurse’s self-employment taxes
  • Liability protection—PCs are designed to provide additional legal liability protection 

Important Considerations When Forming a Professional Nursing Corporation

Are you a registered nurse who is considering forming a business in California? It is imperative that your business is set up properly. Mistakes could cause you serious problems. Here are some of the most important considerations when setting up a professional nursing corporation in California.
  • Name: You need to select a name for your professional nursing practice. California law requires you to include the term “nursing” or “registered nursing” in the official name.
  • Tax implications: Taxes matter. In California, a professional nursing corporation can be taxed as a standard corporation (C Corporation), or it can be taxed as a pass-through business entity (S Corporation).
  • Ownership structure: The ownership structure of your professional nursing corporation must be set up properly. Make sure you have the right documents in place. You must file articles of incorporation with the state. You can also benefit from a comprehensive bylaws. There are several other documents needed to be a professional nursing corporation.
Forming a new business is complicated—especially when you are in a highly regulated industry such as health care. You do not have to have to navigate the business formation process alone. An experienced California business formation lawyer for nurses can help.

Call Our California Business Formation Attorney Today

Lynnette Ariathurai is a business formation lawyer with the skills, knowledge, and legal expertise to help you form a professional nursing corporation in CA. If you have any questions about your rights, responsibilities, or options, please do not hesitate to contact us for a confidential consultation. From our offices in Fremont, near Newark, we serve clients in Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara, and throughout the entire Bay Area.

Can a Business Steal Your Employee?

Employers invest a tremendous amount of time, money, and other resources into recruiting and training their employees. A competitor targeting your qualified employees could cause harm to your business. This raises an important question: Can another business poach your employees? In California, the answer is “it depends”—poaching employees is generally lawful, but there are limits on what another employer can do. In this article, our Fremont business lawyer highlights the key things to know about another company’s ability to steal your employees in California.

Background: California is an At-Will Employment State

As a starting point, it is important to emphasize that California is an at-will employment jurisdiction. The National Conference of State Legislatures (NCSL) explains that at-will employment is a doctrine whereby either—employer or employee—has the right to end the relationship at any time and for any reason, except for an illegal reason. In other words, in the absence of an employment contract, an individual employee is free to leave your company.

Employee Non-Compete Agreements are Unenforceable in California

Some states allow employees to get their employees to sign non-compete agreements that, at least temporarily, prevent them from working for a direct competitor. Employee non-compete agreements are not enforceable in California. However, non-solicitation agreements may be upheld.

Businesses in California Have Rights and Options for Protecting their Interests

Simply put, California law protects an employee’s right to leave their employer for a competitor. It also protects the right of a business to try to recruit qualified employees—including those actively employed at competing businesses. Poaching of employees is generally lawful in California. However, there are some limitations that prevent competitors from “stealing” your employees. Here are some of the key things that employers in California should understand about their rights and options for keeping competing businesses from poaching their employees:

  • Employees Owe a Basic Duty of Loyalty: A worker who is actively employed at your company owes it a basic duty of loyalty. An employee could announce that they are leaving to join a competing company, but they generally cannot actively solicit their co-workers to join them while still in your employ.
  • Employment Agreements May Offer Protection: One strategy that businesses can use to protect their staff from poaching is an employment agreement. An employee who signs a valid and well-tailored employment agreement could face a breach of contract claim if they do not abide by the terms—such as if they leave for a competitor before the contract ends. Though, it is important to emphasize that non-compete clauses cannot be included in an employment agreement in California.  However, the competitor may be liable for interfering with that employment contract.
  • California Law Prohibits “Workforce Raids”: While general “poaching” of employees is not barred in California, there are some restrictions on “raids.” In effect, the law prohibits competitors from using bad faith practices to intentionally solicit a large number of your employees to damage your business. If your employees are “raided” by a competitor, you could have a tortious interference claim under California law. Generally, an employment contract is required to successfully pursue this type of claim.

How Businesses Can Protect Confidential Information When Employees Leave 

While businesses in California have limited options to prevent their employees from leaving to take a position at a competing company, employers do have options for protecting their confidential information. A properly drafted and well-tailored non-disclosure agreement that protects proprietary business information, including trade secrets, may be enforceable in California.

Contact Our Fremont, CA Business Law Attorney Today

Lynnette Ariathurai is an experienced, solutions-driven business lawyer. If you have any questions about another company stealing your employees, we are here to help. Contact us today for a strictly confidential consultation. We provide business law representation throughout the Bay Area.

business contracts, Business Formation & Planning, Contracts

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