Author: Alissa Allen

Business legal services in Silicon Valley

Two Things to Consider When Starting a Software Company

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.

corporate entity, employee compensation, independent contractors, software start-up, start a business

New Wildfire Smoke Employment Requirements for California Businesses

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.

california air quality, employee training, employer safety regulations, wildfire smoke employment law

Why Might a Business Incorporate in Delaware Instead of California?

Classified Board of Directors

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.

board of directors, business entity, business incorporation, startups, stockholders

Navigating California’s Work Breaks and Overtime Laws

California’s work breaks and overtime laws regularly confuse companies that do business in California. Understanding your obligations to provide rest and meal periods to employees is critical to the operation of any size business. A mistake, however innocent or inadvertent, results in costly penalties at rates much higher than any wages that may be due. The crux of the problem involves understanding which employees must be relieved of all their duties prior to a work break and what that entails, and which employees are entitled to overtime compensation for working in excess of 40 hours in a work week.

When companies encounter these issues they are immediately blindsided by numerous laws, case law, and regulations in the area of labor and employment law. If your business has inadvertently misclassified a worker as an independent contractor instead of an employee or an hourly worker as a salary worker, you could find yourself owing these employees hundreds of hours of unpaid wages.

Rest and Meal Breaks

California law requires employers to provide a paid 10-minute rest break to it employees, relieving them of all their work-related duties, when they work for more than 3 1/2 hours. This break should be as far as practical in the middle of a worker’s shift, not at the beginning or end of the work period. The assignment of the slightest task during an employee rest period is not permitted. The break itself must be paid and the employer is not required to record the rest period.

The same is true for meal breaks — no employer may interrupt a worker’s meal period by requiring them to perform a task. This 30-minute meal period every five hours does not have to be paid, should fall in the middle of the worker’s shift, and must be recorded.

In Augustus v. ABM Security Services, Inc., the California Supreme Court issued a ruling holding an employer responsible to pay wages to security guards when they were required keep their pagers and radio phones on during rest and meal breaks. The court awarded the employees close to $90 million in statutory damages, interest, and penalties.

Overtime Laws

California’s overtime laws mandate that any hourly worker who works more than eight hours a day or more than 40 hours in a work week receives overtime compensation for the extra hours. That means that the employee shall not be employed more than eight hours in any workday or more than 40 hours in any work week unless he or she receives one and one-half times his or her regular rate of pay for all hours worked over the threshold.

If you are a business in the East Bay Area including Fremont, Newark, Hayward, Milpitas, Union City, San Leandro, Gilroy, San Jose or Santa Clara looking for guidance on overtime and rest and meal break laws and regulations, seek legal advice and counsel from a California business lawyer today.

California labor laws, meal breaks, overtime laws, work breaks

Three Things You Must Know When Starting a Home Health Agency

Home health agencies have revolutionized elder care options, permitting many older adults to live in their own homes longer than before. These agencies are responsible for placing health care professionals – registered nurses, nursing assistants, physical therapists, or home care aides – in the patient’s home to provide primary care, medical treatment, and assist with day-to-day living activities so that the patient may remain in his or her home.

If you are interested in starting your own health care agency, you will need to master the following three topics to successfully grow your business and meet market demands:

Regulations that apply to home health agencies
The importance of providing employee training, and
The labor laws that apply to the home health care industry.

Know the Regulations That Apply to Home Health Agencies

The federal government and the state of California heavily regulate the home health agency field. There are different laws that apply when hiring a home health care worker directly than when hiring a health care worker through an agency. Additionally, you must have a license to operate a home health agency before you start operating your business.

Copying information from another home health agency to create your compliance documents may not be sufficient. The information may not apply in California, may be outdated, or may never have been correct. It is important to consult with a business lawyer who is knowledgeable about the legal needs of a home health agency and can help you comply with all legal requirements, including record keeping, on-going legal requirements, and compliance with HIPAA.

One of the costliest problems is that if the home health agency collects Medicare, their rules regarding what protocol must be followed and required documentation must be kept in compliance. Medicare performs audits routinely and then charges back the agency many thousands of dollars if records are not in compliance.

Develop and Train Your Team of Employees

It is important for your employees to be fully trained to perform their tasks and to understand what documents need completing and maintaining when providing care for an individual in his or her home. You must provide training that demonstrates how to properly complete these documents and why their inclusion in the patient’s care plan is necessary. Other topics that you should cover in training include HIPAA compliance and labor law compliance.

Know Applicable Labor Laws

Owners of home health agencies must know the labor laws that apply to their workforce. Your payroll department must understand when to pay overtime, the rest and meal break laws, the difference between independent contractors and employees, and what labor records to keep.

If you are an entrepreneur planning to start a home health agency or already running one in the East Bay Area including the communities of Fremont, Hayward, Union City, Milpitas, or Newark, California, seek legal advice and counsel of a business lawyer today.

Business Startup, HIPAA, home health agency, labor laws

The Business Activities Without Corporate Protection

Back to the Basics: Understanding Limits on Corporate Protection

Protecting personal assets from liability for business activities that produce a loss, debt, or liability is one of the chief drivers motivating business owners to establish a corporation, limited liability company, or limited partnership when they set-up their new business. For the most part, in California, once you form one of these entities, your personal assets (such as your home, automobile, and savings) are protected from the reach of creditors of losses, debts, or liabilities, incurred by the business.

There is no corporate protection, however, for debts and liabilities of a business if:

The corporation was not formed correctly; and/or
The corporation does not operate as a corporation.

Even if your corporation was formed correctly and operates as a California corporation, personal liability for the corporation’s debts and liabilities may flow to you personally if you are an officer, director, and sometimes shareholder of the corporation.

California does not provide corporate protection to directors, officers, and shareholders when:

Wages owed to employees: If the corporation is unable to pay employee wages, the officers and directors of the corporation are personally liable during the time that they are directors and officers for those unpaid wages. California holds officers and directors to a higher standard as fiduciaries of the corporation. A fiduciary in these cases is one who is legally obligated to act in the best interest of the corporation (as opposed to themselves). As fiduciaries, the officers and directors should have made provisions to pay employee wages first. If they failed to do so, they can be held personally liable for the employee wages. This also includes the wages of independent contractors, who are wrongly classified as independent contractors, when they are actually employees.
When officers and directors have extended personal credit: Officers and directors of corporations will remain personally liable on corporate debts and liabilities if they extend their personal credit in two types of situations:
- First, granting a personal guaranty on a corporate debt, usually done for commercial leases and bank loans, makes one personally liable for the corporate debt in the event the corporation cannot meet the repayment terms.
- Second, when the corporation operates initially as a partnership or sole proprietorship, and it is then incorporated. If personal credit was utilized to obtain credit for the business in the past, it will remain after a change in status. Even though vendors are informed of the new corporate structure, and they change the name on the account to the corporation, personal liability holds.

Seek Legal Advice From a California Business Lawyer

There are ways to minimize your personal liability when forming a California corporation. Limited liability company, or limited partnership. A California attorney can assist you in reducing your personal liability by forming a corporation correctly and advising you on the proper way to operate the corporation. A California lawyer can also assist you in minimizing or eliminating your personal liability on vendor accounts once incorporated, and not incurring personal liability for future corporate debts.

If you are interested in forming a corporation or converting an existing partnership, sole proprietorship into a corporation, in the East Bay Area including the communities of Fremont, Hayward, Union City, Milpitas, or Newark, California, seek legal advice and counsel of a California business lawyer today.

california corporation, corporate protection, liabilities, officer, shareholder

Resolving Employee Disputes Before You are Sued

Preventing employee lawsuits and other legal claims is more challenging than you might think for a business. When your company is experiencing a staff problem such as an employee who continually comes in late, frequently takes days off, or is not performing his or her job, your first inclination may be to terminate that person.

Confusion Surrounding “At Will” Employment

Many employers believe that because employment is “at will,” meaning an employee may be terminated with or without cause, that their actions against an employee are justified. However, even when the employment relationship is “at will,” some employers hold on to problem employees out of fear that the employee will make a claim against them or sue them for workplace discrimination.

A situation such as this is difficult to resolve without support from legal counsel. If you are facing this challenge, it is important to seek legal advice from an attorney as to the proper way to terminate employment and to understand fully the legal risks associated with such a termination.

Legal Counsel for Employers Resolving Employee Disputes

An experienced California employer lawyer can assist your business by:

Reviewing your documentation
Helping you with your discipline process
Determining whether an employee has a protective status (i.e.: federal and state sick leave laws, disability laws, Title VII laws, etc.)
Evaluating what types of claim an employee could make, and the status of your company’s documentation to fight such a claim.

Often, we find that employers take action first and then belatedly seek legal advice when the employee makes a claim.

At this point, employers often realize that it is costly to resolve a claim after mistakes have been made. A knowledgeable employment law attorney cannot change the facts but will defend the employer and try to get the best outcome, minimizing monetary and reputational damage.

Relevant and timely legal advice regarding employment issues helps minimize problems before they arise. An attorney can help you understand the various federal, state, and local employment laws and make critical changes to your business practices to avoid further claims in the future.

The Importance of Documentation

Any employment conflict could potentially result in litigation. It is important that you, as an employer, comply with California law in all aspects of your business’s employment policies and procedures, including such items as policy training, complaint investigations, hiring and promotion practices, management development, and employee training. You must also keep documentation of these as proof that you are following California law. Your good faith efforts to prevent employment discrimination, harassment and retaliation, and maintain a safe working environment may serve you well – creating a shield or defense to employee litigation.

If you are an employer in the East Bay Area including the communities of Fremont, Hayward, Union City, Milpitas, or Newark, California seek legal advice and counsel of a local business lawyer today.

disputes, employees

Buying a California Business

Get Advice from an Experienced Business Lawyer

Buying an existing company is a great way to enter the market with an established customer base. You can obtain financing more easily, benefit operationally from existing systems and processes, and rely on the deep knowledge base of established employees. It may also be less risky than starting a business from scratch.

However, the risks of liability in purchasing a business are great. When you purchase all or substantially all the assets of a business OR you purchase the business as a whole, the liability of the business flows through to you. Some risks can be mitigated by a corporate shield, but some cannot, and you will find that you are personally liable for any wages and taxes that were not paid by the prior business (even if you did not know about them).

If you are looking at buying a business, the first thing you need to do is evaluate the business as a whole and make a list of pros and cons. This also means digging deep into the company’s financials.

Regardless of the price you are paying for a business, there are three things you should do when evaluating a business for purchase:

Hire an attorney. A California business lawyer can help you draft the purchase agreement to expand your rights during the due diligence process. A good purchase agreement incorporates the right to walk away if you don’t like what you find during the due diligence period and get your money back if you discover that the company’s financials or business operations are problematic.
Always have a business escrow. Including a business escrow in a purchase agreement, where the contract is provided to the escrow company, will help you minimize unknown risks when purchasing an established business. It means that all money is deposited into the escrow company and all debts of the business are paid through the escrow company so that when you close the business purchase, you will receive the business and its assets free of unknown liabilities.
Never waive the bulk sale requirement. Sending bulk sale notices to all creditors including the taxing authorities, that the business assets are transferring, limits the time for creditors to put forth a claim. In an Asset Purchase Agreement, known and unknown liabilities do not transfer to the buyer, if noticed through a bulk sales notice. However, in a business purchase, the business would remain liable for any debts owed by the business post sale.

If you are buying a business in the East Bay Area including Fremont, Hayward, Union City, Milpitas, or Newark, California, protect yourself. Seek legal advice from an experienced business lawyer today.

assets, business, purchasing a business

A Legal Expert Should Be Reviewing Your Businesses Documents and Agreements

Here’s Four Really Good Reasons

Many businesses don’t often hire independent counsel to review their business documents. The documents in question can range from a simple sales contract between your company and a new client, to a commercial space lease for a new location, to a complex asset sale agreement to sell or purchase an asset, product, or business.

It’s quite easy and natural for the Owner, Principal, or President of the company to review and sign-off on any contract that crosses his desk. Who better than the Owner, Principal, or President is most versed in the business and its products, markets, and services?

The Owner, Principal, or President of the business along with the business unit seeking the contractual relationship is most certainly the expert on the subject of the deal. The internal review is just one aspect of the review process for a legal document. When the document in question is a legal document or agreement, a legal expert should be brought in by the business to offer a legal perspective. It is critical for a legal professional to take a look before the document is signed and presented to the other party for approval.

Here are four really good reasons why in your next review of a business agreement you should strongly seek a legal expert to help you legally interpret and analyze the document:

1. The cost of skipping an attorney review of your business agreements could put you out of business in comparison to what it costs to have someone review the documents and analyze the deal before signing the agreement.

2. An attorney review of your business agreements can offer a fresh legal perspective and provide you with advice of current customs and practices in your industry relating to contracts.

3. You are not an expert at contract interpretation or the law if a dispute arises. A lawyer is able to provide clients with interpretation and analysis of the law in your jurisdiction to the facts of your contract and/or potential dispute. No other professional is able to do that. Especially if a mistake was made during the contract formation or execution process, a lawyer can help your business solve the problem and defend your company in court when a deal goes sideways.

4. A business lawyer is also your legal representative. During the drafting and negotiation of the contract, a business lawyer can stand in your place, negotiate with the other party’s counsel, and provide you with actionable intelligence on points in your agreement where you can influence or change terms to protect your business and receive a favorable outcome.

If you are a business in Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara, California, seek the legal advice and counsel of a business lawyer. The Law office of Lynnette Ariathurai is ready to help.

business agreements, business contracts, document review, legal representation