The California Supreme Court Adopts a New Test for Classifying Workers

Posted by on May 1, 2018 in Newsflash | 0 comments

For years, California and other states have gradually restricted employers’ ability to classify workers as independent contractors.  California tends to frown upon classifying workers as independent contractors since independent contractors do not receive the same protections under labor laws as employees and, perhaps more importantly to the state, do not generate the same tax revenue as employees.  For example, independent contractors do not get meal and rest breaks, they are generally not subject to wage and hour laws, and they are not protected under federal employment laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, or the Family Medical Leave Act, among others. For the past 30 years, California has used the Borello standard when classifying independent contractors, which primarily relied upon whether the hiring company had the right to control the manner and means by which the worker performs the work.  Additional factors considered under the Borello test included: the degree of skill required to perform the work, the method of payment, and whether the services being performed for the company are part of the company’s regular scope of business. On April 30, 2018, the California Supreme Court issued its unanimous ruling in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, changing the above rule, and making it even harder for employers to classify workers as independent contractors.  The case was brought by drivers of a package and document delivery company, Dynamex Operations West, who alleged that the company misclassified them as independent contractors in order to avoid paying wages and benefits.  After a lengthy opinion, the court adopted a new test for classification. The New Test for Worker Classification The new test adopted by California presumptively considers all workers to be employees and only considers workers to be properly classified as independent contractors if all three of the following prongs of the test are satisfied: The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; and The worker performs work that is outside the usual course of the hiring entity’s business; and The worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity. As an example, the court stated that a plumber hired by a retail store to repair a bathroom leak would not be performing work that is part of the store’s usual business and would therefore be considered an independent contractor of that store.  However, seamstresses sewing at home using materials provided by a clothing manufacturer would probably be considered employees of the manufacturer. This latest ruling is yet another stern reminder to California businesses that they must take care in classifying their workers.  If you need assistance in properly classifying workers, the attorneys at Navigato & Battin are here to offer help.  In particular, if you have independent contractors who perform tasks for your business on a regular basis or which fall within the scope of your primary business focus, it is essential to have an experienced attorney review the relationship to ensure that you are properly classifying the...

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Does Your Business Website Need a Privacy Policy?

Posted by on May 1, 2018 in Newsflash | 0 comments

Chances are if you are doing business in 2018, your company has some sort of online presence.  It is important to remember that there are regulations that businesses must comply with when operating a website.  In particular, many businesses need to have written privacy policies under California’s Online Privacy Protection Act (the “Act”). The Act applies to any person or company whose website or mobile application collects “personally identifiable information” from California consumers who use or visit the website.  This includes websites which require individuals to enter a username, password, email address, physical address, phone number, social security number, or any other identifiers that could permit the user to be contacted either physically or online.  If the website does collect such information, the website must feature a conspicuous privacy policy stating what information is collected and with whom it will be shared.  The law also requires that the operator of the website comply with the listed privacy policy. In the event your company collects “personally identifiable information,” you need to ensure that your website is compliant with the requirements of the Act.  Compliance under the Act requires the privacy policy to: Be conspicuously posted on the website. This may be done by putting the policy on the website and/or providing a link to the policy on the website; Identify the effective date of the privacy policy; Provide a list of the categories of personally identifiable information collected; Provide a list of the categories of third parties with whom the operator may share such personally identifiable information; Provide a description of the process, if any, by which the consumer can review and request changes to the personally identifiable information collected; and Provide a description of the process by which the operator notifies consumers of any material changes to the privacy policy. The Act additionally requires privacy policy disclosures for tracking of visitors on websites and by online services, defined as “the monitoring of an individual across multiple websites to build a profile of behavior and interests.”  To comply, a privacy policy is required to: Disclose how the website responds to Do Not Track signals from web browsers; Disclose whether third parties may collect visitors’ personal identifiable information on a website; and Provide a conspicuous hyperlink within the privacy policy to an “online location containing a description, including the effects, of any program or protocol the operator follows that offers the consumer that choice.” If your company needs assistance in drafting a website privacy policy, the attorneys at Navigato & Battin are experienced in creating policies that comply with California and federal...

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Do Online Legal Forms Actually Save Money?

Posted by on Apr 2, 2018 in Newsflash | 0 comments

A quick Google search for the phrase “online legal forms” returns 2,620,000 results.  Everyday people are using online legal forms to incorporate a business or draft important legal documents such as contracts and wills.  While these forms are convenient, quick to obtain, and admittedly significantly cheaper than hiring an attorney (at least in the short term), they may not be cheaper in the long run. All too often, clients come to us to finish completing the incorporation of their company or to fix problems that have arisen from the form contracts they purchased online.  Sometimes the issues are small and only require finishing the incorporation documents or drafting an addendum to the contract at issue.  However, at other times the issues have escalated to a point where a quick fix or simple addendum is impossible and the only way to unwind what should never have been a problem in the first place is through costly litigation. In the age of technology, it is easy to rely on a form found on the internet.  However, it is virtually impossible to determine the qualifications of the individual who prepared the form.  Most people assume that an attorney drafted the forms they are viewing, but that is not always the case.  Even if it was an attorney who drafted the form, you have no knowledge of the attorney’s experience or whether the form has been created with the state and local rules and laws which may apply to your transaction in mind.  Furthermore, these forms do not take individual situations into account.  Each transaction is different, with individualized nuances.  A legal form more often than not leaves out significant issues that are particularized to your matter, leaving you with an incomplete contract which does not protect your best interests. While using online legal forms may be cheaper in the short-term, always remember you get what you pay for and the fee typically does not include personalized advice.  Thus, in the long run for the protection of yourself or your company, your sanity, and your pocketbook, it is usually cheaper to hire an attorney to get the proper legal advice from the outset.  The attorneys at Navigato & Battin are experienced in contract drafting and always strive to ensure that our clients have protections in place to put them in the best position to avoid costly disputes down the...

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New California Employment Notice Requirements for Businesses

Posted by on Apr 2, 2018 in Newsflash | 0 comments

Most California business owners know that the state has certain posting requirements with regard to employee notifications.  However, the standard postings that most employers purchase may not include all of California’s mandatory and required postings. Thus, in addition to the traditional notifications outlining employees’ rights (such as time off for voting, equal protection, unemployment insurance benefits, minimum wage requirements, and sick leave), California also requires a number of other employee notifications to be posted in the workplace.  These notifications include: Transgender Rights in the Workplace, which applies to businesses with 5 or more employees and took effect on January 1, 2018; Human Trafficking notification, which took effect on January 1, 2018 and must be posted by the following: on-sale general public premises licensees under the Alcoholic Beverage Control Act, businesses or establishments that offer massage or bodywork services, adult or sexually oriented businesses, primary airports, intercity passenger rail or light rail stations, bus stops, truck stops, emergency rooms, urgent care centers, farm labor contractors, privately-operated recruitment centers, and roadside rest areas. California Prohibits Workplace Discrimination and Harassment (may use any version from December 2014 to the present); Family Care and Medical Leave/Pregnancy Disability Leave, which applies to businesses with 50 or more employees (may use any version from July 2015 to the present); and Your Rights and Obligations as a Pregnant Employee, which applies to businesses with 5 or more employees (may use any version from April 2016 to the present). Failure to post the appropriate notifications can lead to steep civil penalties and/or action by the Department of Fair Employment and Housing, among other things.  Fortunately, if your business does not already post these notices, you may print the notifications from the embedded links above and post.  If you have any questions regarding any employee notification requirements or California law as it relates to employees, the attorneys at Navigato & Battin are here to provide...

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Five Strategies to Help You Avoid Business Litigation

Posted by on Mar 1, 2018 in Newsflash | 0 comments

It is no secret that litigation is an expensive way to resolve business disputes.  Not only are court costs high and attorney’s fees steep, but lawsuits take your focus away from running your business for significant stretches of time.  In order to help avoid the cost and stress of litigation, follow the tips below: Enter into Effective and Enforceable Contracts Each and every business relationship should be memorialized in a written contract.  This includes but is not limited to: agreements between owners, agreements with clients and customers, agreements with employees, agreements with vendors, and agreements with anyone who will have access to confidential business information.  Such contracts should be drafted in a customized way to govern the specific relationship at hand and should clearly spell out the rights and obligations of each party.  While it is tempting to simply copy and paste a contract from an Internet search, it is a much smarter practice to retain an attorney to help craft the contracts in order to avoid or at least minimize disagreements down the road.  A few hundred dollars in drafting fees only seems like a lot of money until you are forced to pay thousands of dollars to litigate disputes over a poorly drafted contract. Obtain Appropriate Insurance Coverage Insurance is a necessity in today’s business world.  Thus, it is critical to fully understand all of the risks of your business to ensure that the company has insurance policies to adequately cover those risks.  Failure to have the proper insurance can prolong the case and subject the company to financial stresses it would not otherwise have to face.  The most common types of insurance to consider are: general liability insurance, commercial property insurance, professional liability insurance, product liability insurance, and workers’ compensation insurance. Properly Train and Supervise Employees When employees are performing within the scope of their job responsibilities, they are an extension of the company.  This includes both time spent in the office and time spent running errands benefiting the company.  Any wrongdoing by an employee while on the job is likely to be attributed to the company.  Therefore, it is vital to ensure all staff members are fully trained on their respective job responsibilities and expectations, understand the company’s policies and procedures, and know that such policies and procedures will be strictly enforced.  In addition, providing employees warnings and/or discipline for violating company policy will go a long way toward stopping risky conduct in the future. Keep Records Often, disputes arise due to mistaken impressions or misunderstandings.  In such cases, the practice of maintaining relevant records to clear up a misunderstanding can be the end of a conflict.  Failure to keep such records can quickly turn the dispute into a game of “he said, she said.”  Records to retain should not only include contracts but also notes of any substantive communications surrounding the contracts.  For employees, keep track of employees’ time, complaints, discipline, and reviews.  Doing so will allow you to quickly establish your position in the event of any employment-related issues, and will serve as a strong deterrent for employee-side attorneys to pursue a case against your company. Be Mindful of Rising Conflicts Paying attention to minor conflicts can be a powerful tool in preventing the conflict from escalating into a large conflict which is...

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Employers Receive a Rare Win in GrubHub’s Independent Contractor Classification Case

Posted by on Mar 1, 2018 in Newsflash | 0 comments

In February, a Ninth Circuit magistrate in San Francisco ruled that drivers providing services to the popular food delivery service company, GrubHub, Inc., are properly classified as independent contractors and thus do not qualify for the protections of employees under California labor laws.  Judge Corley surmised: “Under California law, whether an individual performing services for another is an employee or an independent contractor is an all-or-nothing proposition.  With the advent of the gig economy, and the creation of a low wage workforce performing low skill but highly flexible episodic jobs, the legislature may want to address this stark dichotomy.” In making her decision, Judge Corley emphasized that the most important consideration in determining worker classification revolves around the employer’s control over the “manner and means of accomplishing the desired result” (not its control over the desired result – i.e., the delivery of food to customers).  Ultimately, she found GrubHub exerted minimal control over the details of its drivers’ work, including when they work, how long they work, and how and when they made deliveries. This is a dramatic win for employers across California.  This could be a large step in the right direction for certain types of businesses struggling with the employee/independent contractor decision, not only because it comes down in favor of classifying these workers as independent contractors but also because it was decided in federal court (as opposed to state court).  California is notorious for having a high standard for establishing that workers are truly independent contractors, and this ruling may have an impact on future employee classification cases (particularly for gig companies). Back in early 2015, Uber lost a motion for summary judgment in federal court, because the court determined the workers had met their initial burden in seeking to establish that they should have been classified as employees.  Thereafter, Uber went on to negotiate a $100 million settlement in the case.  Since then, gig companies (i.e., companies which operate primarily through temporary positions and short-term engagements) have been forced to make difficult and uncertain decisions as to whether their workers can validly be treated as independent contractors or not. Regardless of the outcome of this particular case, this latest ruling is a stern reminder to California businesses that they must take care in classifying their workers properly.  The wrong call could subject your company to tens of thousands of dollars in otherwise unnecessary liability.  If you need assistance in properly classifying workers or have further questions, please do not hesitate to contact...

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Employer Requirements for Lactation Accommodations

Posted by on Feb 5, 2018 in Newsflash | 0 comments

The California Labor Commissioner recently published a Frequently Asked Questions (FAQ) Memo regarding lactation accommodations under Labor Code Section 1030.  While the FAQ memo does not contain any new concepts, it does clarify the following principles: California employers must provide a net 10-minute paid rest period for every four hours worked (or major fraction thereof). To the extent practicable, the break shall run concurrently with the rest time authorized for the employee by the applicable wage order; A “net” of ten minutes, means that the rest period begins when the employee reaches an area away from the work area that is appropriate for rest; An employee is entitled to one hour of pay at the employee’s regular rate for each workday that a rest period is not provided; Employers are required to provide suitable resting facilities that shall be available to employees during working hours in an area separate from toilets. The room or location may include the place where the employee normally works if it otherwise meets the requirements of the law. Note, that federal law prohibits employers with 50 or more employees from requiring employees to express breast milk in a bathroom; An employer must allow an employee to leave the work area to pump, but the employer does not have to pay for pumping time, beyond the standard break time; As an employer, you are not allowed to require the employee to submit any documentation regarding her need to pump; An employer may not require an employee to remain on premises during a rest period; An employer may not require that an employee remain in radio communication during a rest period; An employer is not required to provide an employee break time for purposes of lactating if doing so would seriously disrupt the operations of the employer. The Labor Commissioner advises employees that they may file claims if their employers fail to meet their break obligations.  If you have any questions regarding accommodations for lactation or any other employment issues, the attorneys at Navigato & Battin are here to...

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Is it Appropriate to Use Electronic Transmission for Shareholder Communications?

Posted by on Feb 5, 2018 in Newsflash | 0 comments

In today’s age, the vast majority of people and businesses communicate through email versus old fashion mail.  However, when it comes to official shareholder communications, the California Corporations Code has specific requirements for the right to transmit information electronically. Under California Corporations Code, Section 20, the Code permits the use of electronic transmissions for communications under or pursuant to the Corporations Code only if: The recipient has provided an unrevoked consent to use those means of transmission for such communications; and The transmission creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form. Additionally, if the transmission is to a shareholder who is a natural person, the consent to the transmission must be preceded by or include “a clear written statement to the recipient as to (a) any right of the recipient to have the record provided or made available on paper or in nonelectronic form, (b) whether the consent applies only to that transmission, to specified categories of communications, or to all communications from the corporation, and (c) the procedures the recipient must use to withdraw consent.” Several sections of the Corporations Code clearly allow communications (including notices of shareholder meetings, notices disclosing actions taken by written consent of shareholders, and the delivery of annual financial reports) to be made by electronic transmission, but only if they are compliant with Section 20. While remote, a non-compliant transmission may give disgruntled shareholders a basis for a valid objection, which may invalidate the notice and the subsequent meeting and at a minimum be disruptive to business. Given the stringent requirements of Section 20, sending notices through regular mail may be the most reliable and efficient way to comply with the law. If you have questions regarding any of the shareholder meetings or need assistance with any corporate governance issue, the attorneys at Navigato & Battin are here to...

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Equipment Leasing – the Good, the Bad, and the Ugly

Posted by on Jan 3, 2018 in Newsflash | 0 comments

The New Year provides an opportunity for reflection for both individuals and businesses alike.  For businesses, it is a time to reassess operations and determine if any changes should be made.  Whether it be moving your company, updating your office technology, or renewing or entering into new equipment leases, many companies use this time to plan for the next year. Typically, companies have three options when acquiring new office equipment technology: (1) pay cash; (2) obtain a loan to finance the equipment; or (3) lease the equipment.  Most companies have chosen the last option at some point in their business lives, with eight out of ten American companies using leasing as their preferred method of acquiring office equipment.  One of NavBat’s clients has been offering office machine leasing to Southern California businesses for more than three decades.  So we asked the President of Velocity Imaging Products, John Stavola, to provide a summary of the advantages and pitfalls of equipment leasing.  Here is what he had to say: There are numerous benefits to leasing, such as: (1) it requires little to no cash out of pocket at the time of acquisition; (2) depending on the type of lease, leases may be considered an operational expense (rather than a capital expense); however, it is always best to consult with your tax professional concerning the means by which you expense an equipment lease; (3) leasing allows a business to hedge against the risk of equipment obsolescence and provides the ability to upgrade equipment as needs change; and (4) customers typically receive much faster customer service when problems arise with the leased equipment than they would if they owned the equipment. While equipment leases have many significant advantages, business owners should also be equally aware of the common pitfalls that may occur with these leases.  At the outset, it is important for customers to understand that equipment leases are commercial leases, meaning they do not have to comply with the truth in lending laws.  This is significant because it means that commercial leases can require a business to provide the leasing company with a “letter of intent” within a specific window near the end of the lease in order to avoid automatic lease renewal.  In the event this letter of intent is not sent to the leasing company, the lease will go into “evergreen” status (automatic renewal) for a period of time.  An example of such language is as follows: “this agreement will renew for 90 days unless you provide a written notice to us between 90 and 150 days prior to the end of the lease with your intent to either purchase the equipment or return it to the leasing company.” Furthermore, the “letter of intent” most likely needs to be sent to the leasing company (with whom the business owner has probably never had any interaction) and not the service provider of the leased business equipment (e.g., a copier/printer).  The good news is that these pitfalls can be avoided so long as the business owner reads and understands the terms of the equipment lease before signing it.  Make sure to keep a fully executed copy of the written lease agreement to help navigate the proper termination of the lease and the rights and obligations of the business during the term of...

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California’s New Employment Laws – 2018

Posted by on Jan 3, 2018 in Newsflash | 0 comments

As has become the norm in California, a slew of new employment laws will go into effect this year that will dramatically affect certain businesses throughout the state.  It is advised that all California employers review the new laws below and implement the necessary changes, or speak with Navigato & Battin to find out how such laws may affect your operations in 2018 and beyond. Minimum Wage Increase Beginning on January 1, 2018, California employers with 25 employees or less are required to pay a minimum wage of $10.50/hour.  For those employers with 26 employees or more, the minimum wage is set at $11.00 an hour.  The minimum wage in the City of San Diego will not increase in 2018 and instead will remain at $11.50.  If your business is located within the San Diego city limits, make sure you are complying with the increased minimum wage and not California’s lower standard, regardless of the number of employees your company employs. AB 1008 – “Ban the Box” Effective January 1, 2018, employers may no longer ask applicants for employment, either in writing or orally, about their conviction history until a conditional offer of employment is made. After an offer of employment is made conditioned on a background check, the employer may conduct a criminal history background check.  If the background check reveals a criminal conviction, and the employer wants to deny the applicant the position at least in part because of the conviction, the employer must engage in an individualized assessment of whether the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job that would justify denying the applicant the position.  Such assessment is not required to be in writing, but the assessment should consider: the nature and gravity of the conduct, the time that has passed since the criminal activity, and the nature of the job sought.  Thereafter, the employer must notify the applicant of its decision in writing which must include the conviction(s) which formed the basis for disqualification, a copy of the conviction history report, and an explanation of the applicant’s right to respond to the preliminary decision.  The applicant then has at least five business days to respond to the preliminary decision.  The employer must consider the information provided by the applicant before making a final decision.  If a final decision to deny employment is made, the employer must again notify the applicant in writing and explain any existing procedure the employee has to challenge the decision or request reconsideration.  The notice must also disclose that the employee has the right to file a complaint with the Department of Fair Employment and Housing. Additionally, employers may not consider or disseminate information about the following at any time: (a) an arrest which did not result in a conviction, excepting in extremely limited circumstances; (b) referral to or participation in a pretrial or post-trial diversion program; or (c) convictions that were expunged or sealed. SB 396 – Harassment Prevention Training Regarding Gender Identity, Gender Expression, and Sexual Orientation For many years, California has required those employers with 50 or more employees to provide two hours of sexual harassment prevention training to all supervisory employees within six months of their assumption of a supervisory position and once every two years thereafter....

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