Tag: Contracts

Business legal services in Silicon Valley

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

Negotiating Managed Care Contracts

The health care industry is one of the largest and most complex in the United States. According to data from the Centers for Medicare and Medicaid Services (CMS), total public and private U.S. health spending exceeds $4.1 trillion. Insurance providers play a huge role in health financing. Here, our Fremont business contract attorney highlights some of the key things to consider when negotiating managed care agreements.

What is a Managed Care Contract?

As a starting point, it is important to understand what a managed care contract is and how it works. A managed care contract is effectively an agreement between a medical provider (doctor, specialist, etc.) and a third-party entity. Through a managed care plan, health plan providers will enter agreements with medical facilities to provide care for members at reduced costs. There are a number of different specific types of managed care arrangements, including:

Health Maintenance Organizations (HMOs);
Preferred Provider Organizations (PPOs); and
Point of Service providers.

A Managed Care Agreement is Not Cast in Stone: You Can Negotiate Key Terms

For doctors and other medical providers, there can be advantages to entering a management care agreement. However, similar to any other type of important commercial contract, the specific terms and conditions always matter. A proposed managed care contract is not set in stone. The terms are subject to negotiation. Negotiating an effective agreement requires understanding your needs and your risks. Some key provisions that are subject to negotiate include:

Rates: Rates matter. As noted previously, managed care agreements generally provided lower cost services to members. When doctors and other medical practices enter these agreements, they need to be sure that the reimbursement rate is in their best interest.
Claims Process: The language surrounding all aspects of the claim process should be carefully reviewed. Some key issues to look for include day-of cutoff, downcoding, no take backs, and withholding,
Dispute Resolution (Arbitration Provisions): Disputes can happen within the context of a managed care agreement. A well-drafted agreement will generally have some sort of dispute resolution clause. For example, it may call for arbitration.
Exit Options (Termination, Expiration): In a managed care agreement, it is also important to look at the exit options of each party. Does either party have the right to terminate the agreement? When will the contract expire? What happens after the date of expiration?
Other Unfavorable Provisions: Finally, medical providers should also carefully look for other provisions that may be unfavorable. As an example, some managed care agreements contain language that gives the payor broad (or even unilateral) authority to amend the terms of the contract. This type of language generally needs to be removed.

If you are preparing to negotiate a managed care agreement, there are major advantages to consulting with an experienced attorney. A business lawyer who works closely with medical practices and health care facilities can negotiate, draft, and review your managed care contract to ensure that it is in your best legal and financial interests.

Contact Our California Business Lawyer for Medical Practices Today

A business law attorney with extensive experience, Lynnette Ariathurai works with companies and medical practices in the health care industry. If you have questions about negotiating a managed care contract, please contact our Fremont law office for a strictly confidential initial consultation.

agreements, Contracts, healthcare, managed care

Restructuring a Business When Adding a Partner

Successful businesses are not static. With market conditions constantly in flux, it is not uncommon for companies to restructure. You may need to restructure your business if you are bringing a new partner into the mix. In this article, our Fremont, CA business law attorney highlights some of the key ways in which you may need to restructure your business when adding a new partner.

Four Ways You May Need to Restructure Your Company When Adding a New Partner

Modifying Ownership Interests

A new business partner is likely to have some sort of ownership interest in the company. By definition, this means that the ownership stake held by you—and the other current business partners—will be diminished. Whether another current business partner is leaving the company or you are simply adding a new person into the business, you need to determine exactly how ownership interests will be modified. An experienced Fremont, CA business law attorney can help to ensure that this process is handled properly.

Changing the Legal Entity of the Business

A new partner may mean that you need to adjust the underlying structure of your business. A change to a new legal entity may be advisable or even required. Such as when you want to minimize your liability when adding a new partner. You may want to change from a sole proprietorship to a partnership or limited liability company. Changing the structure of your business will involve drafting and filing appropriate documents. It is imperative that you and your business partners carefully comply with all applicable rules and regulations.

There may also be tax considerations. For example, the State of California Franchise Tax Board notes that general partnerships (GPs) are not subject to an annual tax, but all limited partnerships (LPs) must pay an $800 annual fee to the state. Yet, this annual tax is often a small price to pay for the liability protection afforded by a limited partnership.

Drafting (or Renegotiating) Contracts

Contracts are at the foundation of many businesses, especially partnerships, limited liability companies (LLCs), and S corporations. If you are adding a new partner to your California business, it is essential that you have comprehensive, well-drafted agreements in place. In some cases, you may need to renegotiate some of your company’s existing contracts in order to make space for the new business partner.

Selling or Purchasing Assets

Finally, it may be advisable to sell or to purchase assets when adding a new partner to the company. The addition of a new business partner is often a good time to reorganize the company so that it is in the strongest possible position to take advantage of all available opportunities. Your business may be better off without certain underperforming assets on the financial books or may want to expand into new areas. As asset purchases or sales can be complex transactions, business partners should be prepared to consult with a lawyer.

Get Help from Our Fremont, CA Business Law Attorney Today

Attorney Lynette Ariathurai is an experienced partnership law attorney. For help restructuring your business when adding a new partner, please contact our firm today. With an office in Fremont, we are near Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara.

Business Formation & Planning, Contracts, ownership

Common Legal Documents Needed for a California Business

Starting a business in California has many complex requirements, including a wide variety of legal documents. As you decide on the appropriate structure for your business, you may need to file articles of incorporations or organization, and you will need to draft and execute contracts for commercial leases and for hiring employees. Yet business owners continue to require many kinds of legal documents while running a company, from purchase and lease contracts to new employee and client contracts. Attorney Lynnette Ariathurai regularly assists businesses in Northern California with the varied legal documents necessary to start and to run a business. Our firm wants to provide you with more information about some of the common legal documents needed for a California business.

Filing Documents to Get Your Business Started

Depending upon the type of business you are planning to start, you may be required to fill out and file certain legal documents with the state of California. If you are planning to form a limited liability company (LLC), for example, you will need to file Articles of Organization with the California Secretary of State. If you are planning to form a corporation, you will need to file Articles of Incorporation with the California Secretary of State. Before you file Articles of Organization or Articles of Incorporation, you will need to check that your business has a unique name that is not currently being used by a company in California.

Depending upon the size and type of business, you also may need to register a “Doing Business As” or DBA. To register a DBA, you may need to file a fictitious business name (FBN) statement with the County Clerk or Register-Recorded in the county where your business will be located. If your business will not be in California but will do business in California, you may need to register with the Clerk of Sacramento County.

Business Contracts in California

There are many different kinds of businesses in California, and the specific types of business contracts you will need to have in place will depend upon a variety of factors, including the type of business you are operating and the type of workers you will hire. In general, the following are common contracts that are used in California businesses:

Leasing contracts;
Employee contracts;
Equipment purchase and lease contracts;
Client contracts;
Sales contracts;
Warranties and extended warranties; and
Service contracts.

How a Fremont-area Business Lawyer Can Help

A local business lawyer can assist you with the different elements of drafting, reviewing, filing, and defending legal documents in a California business. When it comes to the documents you need to file to form your business, we can assist you in creating and filing those necessary materials. With business contracts, attorney Lynnette Ariathurai can assist you with the development of contracts and review of contracts your business receives, as well as subsequent issues like breach of contract claims.

Working with a local attorney can be much more beneficial to your business than an online service that offers legal document drafting and review since a local attorney will have experience working with businesses governed by California law and handling filings in the specific county where your business is located.

Contact a Business Law Attorney in the Fremont Area

If you are planning to start a new business, it is essential to work with an experienced California business law attorney who can assist you in drafting and filing the varied legal documents you will need to run a successful company. Attorney Lynnette Ariathurai has been assisting businesses in Northern California for years and can begin working with you today. Our firm regularly assists businesses and entrepreneurs in Fremont, Hayward, Union City, Milpitas, and Newark.

Contracts, documents, forms

Common – And Critical – Errors That Can Sink A Business

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Wednesday, May 11, 2016.

Eager to follow their dream and make a profit off a great idea or their passion, many business owners make critical mistakes during the formation period. Some mistakes cause problems that can be corrected later – but far too many cause problems that can stunt or sink a business. It is critical that you have skilled legal guidance on your side as you establish a business to avoid common pitfalls and errors.

Here are a few of the most common small business formation mistakes:

Assuming they need an LLC – Most people have heard of an LLC and therefore automatically assume that it is the entity type they need legally protect their business. There are a broad range of types of business entities, however, and each accomplishes something unique. Sometimes an LLC is not the correct fit for a business and creating an LLC could leave the business – and its owners – exposed to risk. It could also severely inhibit growth of the company later down the road.

Assuming template forms and contracts are good enough – Many people simply download boiler-plate agreements and contracts online and then fill in the blanks. In a lot of cases, business owners do not even read these agreements and have no idea what kind of exposure they leave the business open to. Work with an attorney to create contracts and agreements that protect your company and meet its growth needs.

Assuming they can have an “understanding” with partners and shareholders – Many people go into business with friends, family and colleagues with whom they already have a great relationship. They neglect to write agreements to formalize the business relationship, including obligations, percentage ownership and entitlements. You can count on disputes arising at some point in the life of the business. If those disputes are severe enough, your lack of an agreement could cost you or your partner an entire ownership share of the company and all the hard work and resources that have been invested.

Assuming no one will steal their idea – The greatest asset a small business has is its idea. Whether that is the concept to sell purple popsicles from a food truck to the next great innovation in technology, someone will try to duplicate what you are doing. It is critical that you work with an intellectual property attorney to develop safeguards, patents, licenses and trademarks that will protect your idea and the ability of your company to extract return from that idea.

The Law Office of Lynnette Ariathurai partners with business owners and entrepreneurs to build a solid legal foundation that will facilitate growth, both in the early stages and throughout the life of the company. Investing the time into doing it right up front will pay in dividends later.

Business Formation & Planning, Contracts, entrepreneurs, managing partners, trade secrets

Quick Tips Before Signing a Contract

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Business Formation & Planning on Wednesday, December 16, 2015.

A business contract isn’t just a piece of paper. It’s a document that explains who you are doing business with, what type of business will be conducted and much more.

What is the person’s reputation in the industry? How has the business dealt with past deals? What is their reputation?

Consider the following factors before you sign an agreement:

Read the full agreement. This seems simple. However, all too often individuals sign agreements without reading the terms and conditions. If there is language that seems subjective or unclear, have an attorney review it with you and suggest amendments.
Know who’s involved in the contract. Who does the contract include? What parties will be held liable if there is breach of contract? Be sure the contract clearly identifies all parties.
Be aware of the length of the agreement and how it affects business. Make sure the actual length of the contract is clearly identified within the contract. If the contract is going to be renewed, how will that be handled? If the terms for the length of the contract are unclear, you can have an attorney assist you in making that language clearer.
Know your rights. Know what you are entitled to under the contract and what you are required to deliver. What happens if something goes awry? An attorney can draft terms in a contract to protect you from risks of liability and help you get what you bargained for from the deal.

While you may not consider working with a lawyer for drafting and signing a simple contract, the reality is that a lawyer can help save costs for disputes that could arise in the future. The time and money you spend, upfront, can ultimately be much more cost-effective. Consider how legal contract representation could benefit your situation.

Business Law, Contracts, tips on contracts