Deen Law | Business Law and Estate Planning » Employment Law

California Employees

Matt Deen — Tue, 10 Mar 2015 22:28:48 +0000

California Employees Entitled to Paid Sick Leave

On September 10, 2014, Governor Jerry Brown signed into law legislation requiring all California employers to provide paid sick leave to any employee who worked in California for 30 days. California becomes only the 2nd state in the country with such a requirement, which shows California’s continuing commitment to being a very pro-employee state.

Every single private-sector employee is entitled to the paid sick leave. There are no industry exceptions (yet). It applies to all workers whether full-time, part-time or seasonal. The size of the employer is irrelevant.

Here are the details:

Effective July 1, 2015
Employers must provide paid sick leave to employees who work 30 or more days within a year from the start of their employment.
At a minimum, paid sick time accrues at a rate of one (1) hour of paid sick time for every 30 hours worked.
Employers may limit an employee’s use of paid sick leave to twenty (24) hours or three (3) days in each year of employment.
Employers may cap the total number of paid sick leave hours that an employee may accrue at a total of forty eight (48) hours or six (6) days.
Failing to comply may subject employers to enforcement actions by the Labor Commissioner and to private litigation under the Private Attorney General Act. If pursued in court, employees may be entitled to reinstatement, back pay, reimbursement for attorneys’ fee and other costs.
Civil penalties for failing to comply are up to $4,000 per employee.

Now is a great time to update your Employment Agreements and Employee Handbooks to reflect these changes effective July 1, 2015. If you have any questions about complying with these new employment laws with respect to paid sick leave, please do not hesitate to contact me.

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Updating Your Estate Plan

Matt Deen — Fri, 19 Dec 2014 06:02:52 +0000

Updating Your Estate Plan

After deciding to implement an estate plan, many people procrastinate for months (even years) before they finally reach out to an attorney to have one prepared for them. Add that to the fact that, despite my best efforts to make the process as painless as possible, it can be an unpleasant conversation for most people. After all, who wants to contemplate their own death?

After finally completing their estate plan, clients often feel relieved since they’ve now checked that task off of their to-do list and have a definite plan. Unfortunately, though, most estate plans do not go through periodic reviews, which jeopardizes the effectiveness of the entire plan. Documents tend to be forgotten about. Estate plan, binders either get placed in a home safe or safe deposit box (best practice), or they are stored in a random drawer or on shelf somewhere in the home where they sit and collect dust.

But while life continues evolving – years go by, kids grow older, assets are accumulated, and people come in and out of your life – estate plans remain the same unless they are reviewed and updated according to your life as it is presently (not how it was when the plan was originally executed).

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LLC Operating Agreements

Matt Deen — Fri, 07 Nov 2014 06:04:07 +0000

LLC Operating Agreements

Believe it or not, LLCs are not actually required by law to have written operating agreements in California (CA Corporations Code §17701.02(s)). Unlike corporations, there are essentially very few requirements of LLCs, and this is viewed as one of benefits of LLCs over corporations. Even though California law does not require a written LLC Operating Agreement, there are plenty of good reasons to have one.

First and foremost, many banks will require you to have an LLC Operating Agreement to be able to open a bank account for your LLC and your LLC must have its own back account. You cannot commingle LLC funds with personal funds. This could result in a loss of the liability protection provided by the LLC. With that being said, the best reason to have an LLC Operating Agreement is to document the ground rules and foundation for (1) relations among the members and the LLC, (2) the rights and duties of the manager, and (3) the activities of the LLC and the conduct of those activities.

It is important to do this with your business partners at the outset of the new venture when everything is fresh, going well and everyone is getting along. This is because people have a tendency to either forget or conveniently modify their understanding of oral agreements over time, whether intentionally or unintentionally. Failing to document your agreement in writing is a recipe for costly litigation in the event that things go sour within the LLC.

Conduct a search online for a “California LLC Operating Agreement,” and you will find dozens of templates that you can download either for free or for a nominal charge. For single-member LLCs, the form of the LLC Operating Agreement is largely unimportant since you are the sole owner (member) and/or manager (if you elected to be a “manager-managed” LLC when your LLC was formed). As the only person involved, you have the ability to make whatever changes you want to the LLC Operating Agreement at any time with virtually no consequences.

However, for LLCs with more than one owner, a written LLC Operating Agreement tailored to your situation is highly important. Each member of the LLC should be represented by separate, independent counsel to ensure that each party’s interests are protected to the extent reasonable under the circumstances. For such companies, simply downloading a template from the internet and using that as the LLC Operating Agreement is kind of like downloading a random set of architectural drawings for the new house you want to build. You will end up with a house, but will it really be the house you wanted? Probably not.

Much like your home, an LLC Operating Agreement really needs to fit your unique situation. The agreement that is offered by LegalZoom, for example, is not tailored to your needs. Instead, it simply provides a summary of the rules on the default California law. In fact, its lack of real substance actually has the potential to hurt your personally and your LLC in the long run.

Business purpose

Such standard agreements do not include items that should be tailored to your situation such as:

Management matters
Issues reserved for the unanimous vote of the members
Fiduciary duties of members and managers
Transfer restrictions
Exit clauses
Additional capital contributions
Priority as to distributions of profit and loss
Dispute resolution
Dissolution of the LLC

So what are your alternatives? Only through specific guidance by an experienced attorney can you be sure to create a well thought out LLC Operating Agreement for your unique business and avoid unnecessary disputes in the future. While the default California laws are still a great starting place, Deen Law can help you build from there, stepping away from the cookie-cutter document and making changes and additions where appropriate for your particular situation.

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