HOW TO REVIVE A SUSPENDED BUSINESS ENTITY IN CALIFORNIA 

Posted by on Oct 2, 2017 in Newsflash | 0 comments

Several months ago, we posted an article titled: Failure to File a Statement of Information or Pay California’s Franchise Tax May Result in the Loss of Your Company’s Name, discussing the importance of complying with the California Secretary of State and California Franchise Tax Board’s (“FTB”) requirements to ensure your company remains in good standing.  As we explained, an entity may be suspended by the Secretary of State for failing to file its Statement of Information on time or by the FTB for failing to file tax returns, pay taxes, or pay the yearly $800 FTB tax.  However, if your company has gotten suspended, it can be revived (with some additional stress and money…of course!). Reviving an Entity Through the Secretary of State Entities labeled as “SOS Suspended” are suspended by the California Secretary of State for failing to file a Statement of Information.  These entities can be revived by paying a penalty, which is typically $250, and filing the missing Statement(s) of Information.  Often times, the Secretary of State will assess the $250 penalty prior to suspending the entity, so your company may still be “Active” on the Secretary of State’s website and still owe the penalty.  Once the penalty has been incurred, in order to avoid suspension it must be paid. Reviving an Entity Through the Franchise Tax Board Reviving an entity that is “FTB Suspended” is a bit more complicated.  First, unless you are aware of why the FTB has suspended your entity, you will need to call the FTB to determine the reason for the suspension.  Second, the entity must file an Application for Revivor, which is Form 3557 on the FTB website.  This form must be submitted by an owner, officer, or a majority of the company’s board of directors or managers.  With this form, the entity must file all delinquent tax returns and pay all delinquent taxes, including penalties and interest.  Depending on the company’s specific situation, this process can take anywhere from a couple of weeks to a couple of months.  Upon compliance with the FTB’s requirements, the FTB will check with the Secretary of State to ensure the name is still available (companies lose rights to their names when suspended).  After that, the FTB will issue a Certificate of Revivor, which reinstates the entity.  The Secretary of State will then change the entity’s status back to “Active”. Potential Problems with Contracts As discussed in our previous article on the topic (referenced above), when an entity is suspended, contracts entered into by the entity during that time are voidable.  Reinstatement does not change this fact.  If a contract was voided during the period of suspension, it will remain voided after the entity is revived.  Additionally, if a contract was entered into during the suspension but was not voided during the suspension, it can still be voided by the other party after reinstatement. Luckily, entities can protect themselves against this consequence, but like all things in California, it will cost you.  Relief can be obtained by filing the Relief From Contract Voidability, Form 2518 and paying a penalty of the lesser of: (1) $100 per day; or (2) an amount equal to the amount of the taxes due for that year (less any interest or penalties assessed with the taxes).  Once the form...

read more

FLSA’S SALARY EXEMPTION INCREASE OVERTURNED

Posted by on Oct 2, 2017 in Newsflash | 0 comments

In May 2016, President Obama signed into law a measure that would increase the salary requirements relating to the federal white-collar overtime exemption under the Fair Labor Standards Act (“FLSA”).  The law was supposed to take effect on December 1, 2016, and aimed to prevent workers from being denied overtime pay under the white-collar exemption if they made less than $913 per week (or $47,476 per year) as a full-time employee.  However, on November 22, 2016, a federal district court judge in Texas placed an injunction on the Department of Labor’s overtime rule revision, thus delaying the revision’s December 1st effective date. On August 31, 2017, the federal district court in Texas granted summary judgment for the plaintiffs in the case, who were comprised of various business groups and 21 states.  Judge Mazzant ruled that in doubling the salary required under salary test, the Obama administration’s proposed alteration of the FLSA was not “reasonable” and therefore did not warrant the “deference” otherwise shown by courts to regulatory actions under the Chevron precedent.  “The Department has exceeded its authority and gone too far with the Final Rule,” he ruled.  “Nothing in [FLSA] Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a ‘bona fide executive, administrative, or professional capacity’ employee should be exempt from overtime pay.” It is unlikely that the Trump administration will appeal this ruling.  Therefore, for the time being, the federal “salary test” under the FLSA remains at $23,660 annually ($455/week) for exempt employees.  But before you start slashing your payroll, please note- similar California law still requires a significantly higher minimum salary for an employee to be classified as “exempt” under state law, and employers in California are required to comply with both sets of laws.  If you have any questions concerning whether your company’s employees are being properly classified as “exempt” or “non-exempt” or any other employment-related questions, the attorneys at Navigato & Battin are here to offer you assistance....

read more

NAVIGATO & BATTIN, LLP OBTAINS COMPLETE VICTORY, SECURING DEFENSE VERDICT IN TRIAL ON CLAIMS FOR BREACH OF CONTRACT, COMMON COUNTS

Posted by on Sep 5, 2017 in Newsflash | 0 comments

San Diego, CA: On July 10, 2017, San Diego Superior Court Judge Judith F. Hayes ruled in favor of Navigato & Battin, LLP’s client, Aurora Spine, Inc. (“Aurora”) and against the plaintiff in a case arising from a claimed breach of contract.  In the case, the plaintiff, Veridiam, Inc., claimed that Aurora breached a contract for custom goods ordered from Veridium, and sought more than $215,000.00 from Aurora.  Pre-judgment interest could have tacked on tens of thousands of dollars more to the final judgment. After a multi-day trial, Judge Hayes found that Aurora was entitled to a defense verdict on all claims, including the granting of a rare Motion for Judgment in Aurora’s favor on the common count claim asserted by Veridium.  The judge ruled that there was no evidence that Aurora breached its obligations to Veridium based on the terms of the contracts at issue and the parties’ business relationship and dealings.  After considering the evidence and witness testimony, the judge determined that the parties had not altered their agreement by oral or written modifications (as alleged by Veridium) and that Veridium had failed to prove its case.  The court stated, “Plaintiff [Veridiam] has the burden of proof in read to its breach of contract cause of action.  Plaintiff [Veridiam] has failed to carry its burden.” Of the victory, NavBat partner and trial attorney Travis Bray, stated: “We came into the case a couple of weeks before trial, so it was a bit of a scramble to get exhibits put together, witnesses prepared, and to get cross-examinations and opening and closing statements ready for the Court.  However, we had solid defenses on our side and came into Court well prepared for everything the other side threw at us.  It is very satisfying to step into a case like this and help the client to a well-deserved victory.  The Court got this one right.” Navigato & Battin, LLP is a San Diego-based business litigation law firm, focusing on assisting small to medium-sized businesses with all of their legal needs.  If you have a trial upcoming, no matter how soon, give us a call to see how we might be able to...

read more

CAN YOU FIRE SOMEONE FOR BEING A POLITICAL EXTREMIST?

Posted by on Sep 5, 2017 in Newsflash | 0 comments

Following recent events in Charlottesville, Virginia involving a “Unite the Right” rally as well as other subsequent politically charged rallies, a large social media campaign has been undertaken to identify the protestors and encourage their employers to terminate their employment.  Groups such as the Ku Klux Klan, other white supremacist and white nationalist groups and even extreme liberal grounds such as Antifa are all stirring up controversy.  So, what do you do if one of your employees is involved in political activities that you do not agree with or that you believe reflect poorly on your business? These decisions require employers to consider a complex mix of the rights and responsibilities with respect to their employees, the public, and to their business in general.  In general, California law bans private employers from discriminating against workers due to their political views, affiliations, or activities, subject to certain exceptions. Cal. Labor Code §1101.  These exceptions relate to the harm such actions may inflict on your business.  For instance, if an employee participates in a political activity that creates a conflict of interest with your business model, you could consider terminating the employee’s employment.  Additionally, if your employee’s political activities are interfering with their work, it may also be grounds for termination.  California law also prohibits employers from adopting any “rule, regulation, or policy” that bars employees from running for public office, or participating in politics outside of work. Cal. Labor Code §1101.  However, if such activities interfere with the employee’s work, you may have valid grounds for termination. Finally, employers must also be careful not to violate the National Labor Relations Act by punishing employees who may be commenting about the terms and conditions of their employment.  For example, a white employee complaining about losing out on a promotion to a non-white co-worker as part of an affirmative action program may be engaging in protected conduct, depending on the circumstances.  Protections on expression are not absolute, but a certain amount of tolerance of varying viewpoints is required, whether you as an employer agree with them or not. Employment issues relating to free speech are very complex issues for employers.  The facts of any given situation vary wildly and must be analyzed on a case-by-case basis.  If you have any questions regarding federal or California employment law, the attorneys at NavBat can help you to walk this delicate...

read more

Want to see how important you are to your attorney? Cheat at golf.

Posted by on Aug 1, 2017 in Newsflash | 0 comments

If you have had any significant interactions with any attorney during the course of your life, and if you have even a remote interest in golf, you have almost certainly played at least a few rounds with your attorney.  Attorneys tend to love golf, most likely because attorneys view the intricate sets of rules and decorum involved in a round of golf as a near-perfect reflection of the practice of law.  Golf, like civil litigation, is viewed as an age old sport steeped in tradition.  The rules of golf, like those of the courtroom, were meant to provide a general lay of the land to allow participants to know exactly how to proceed from start to finish.  However, attorneys quickly realized that the rules dictating their behavior and actions in court were not so much rules to be followed as they were boundaries to be pushed.  With these realizations, attorneys came to understand that they could win cases by having a mastery of the finer points of procedure even where their clients did not have the best case.  Eventually, these procedural games have become almost as important as the underlying facts of the case to the attorneys who use them as weapons every day. In much the same way, your attorney almost certainly relishes the rules of golf, realizing that a mastery of those rules can propel them to victory in a match that their skills might not otherwise allow.  Your attorney likely has an encyclopedic memory of the rules of golf, and uses that memory to his or her advantage whenever possible.  So how do you determine how important you are to your attorney?  Go ahead and break those rules the next time you play a round of golf with him.  Kick that ball out of a divot and into a more favorable lie.  Ground that club in a hazard.  See how many times you can break minor rules before your attorney says something to you about it.  It is an absolute certainty that he sees it every time.  If you can get away with five or more breaches in a single round without hearing a word about it, you are likely a very important client!  At the very least, you can be sure you will be driving your attorney nuts in the meantime.  But take solace in the fact that the same way of thinking that makes those rules so important on the golf course will serve you well when that same attorney is fighting for you in court.  And if you ever need someone to play a round of golf with, the attorneys at Navigato & Battin are here to...

read more

Navigato & Battin’s 19th Annual Opening Day at the Del Mar Races

Posted by on Aug 1, 2017 in Newsflash | 0 comments

On July 19, 2017, Navigato & Battin held its 19th Annual Opening Day at the Del Mar Thoroughbred Club.  Clients and friends enjoyed a day of mingling, food, wagering, and even a magician.  Of the day, Daniel Navigato states, “NavBat Opening Day is always one of my favorite events of the year, as it gives us the opportunity to show appreciation to our clients and friends while having fun in the process.” Whether you walked away with your pockets a little heavier or were amazed at the magician’s mind-boggling tricks, we enjoyed socializing with everyone outside of the business setting.  Thank you to all those who attended and we look forward to seeing everyone at next year’s...

read more

Non-Binding Letters of Intent and Memoranda of Understanding – What Are they Good for?

Posted by on Jul 5, 2017 in Newsflash | 0 comments

Most transactions involving the purchase and sale of a business start with negotiations between the buyer and seller and end with a formal binding contract.  In between these steps, the parties often exchange preliminary draft versions of the major deal points through letters of intent (“LOI”) or memoranda of understanding (“MOUs”).  Because most LOIs and MOUs are non-binding, business people do not always put enough time and effort into making sure all important terms are included.  They mistakenly believe that the time to address the detailed terms is when they negotiate the final, binding agreement.  However, a detailed letter of intent which addresses all of the material terms provides a road map to a favorable outcome and helps avoid hurdles which arise in finalizing the binding contract. Although MOUs and LOIs are normally non-binding, they contain the major deal points of the transaction and they are signed by the parties.  Because they are signed, the parties to a transaction will be hard pressed to renege on terms when it comes to negotiating the final agreement.  For example, if the LOI contains a term that says that certain assets will be excluded from the sale, it would be difficult for the buyer to insist that such assets be included later down the line (at least not without additional compensation).  Thus, it is very important to make sure all material terms of the transaction are included in an LOI or MOU, even if the other side is not technically bound by such terms.  ...

read more

Use of Criminal History in Hiring Decisions

Posted by on Jul 5, 2017 in Newsflash | 0 comments

A new regulation approved by the Fair Employment and Housing Council limits employers’ ability to make hiring decisions based on an applicant’s or employee’s criminal history.  The new law, titled “Regulation §11017.1: Consideration of Criminal History in Employment Decisions,” went into effect on July 1, 2017.  Unless otherwise allowed by law, the regulation expressly prohibits basing employment decisions on a conviction for non-felonious marijuana possession more than two years old, an arrest that did not lead to a conviction, or any proceedings which occurred in juvenile court or which were expunged from the applicant’s record. Further, employers who consider convictions in the decision-making process can be found to have discriminated against employees or job applicants where a use of such information has an adverse impact on a protected class (gender, race, national origin, etc.).  To avoid a discrimination claim, employers must demonstrate that the convictions considered were related to aspects of the job and were consistent with business necessity.  Screening procedures should consider the gravity of the offense, how much time has passed, and the type of employment. If screening is used to eliminate candidates without consideration of a candidate’s individual circumstances, the employer has the burden of showing that the criteria used adequately distinguish between candidates who pose an unacceptable level of risk and those who do not.  This burden is especially high if the conviction is more than seven years old.  Whether a candidate would pose an unacceptable level of risk would be highly dependent on the type of employment being sought, among many other factors. In the event the information regarding an applicant’s criminal history is obtained through a third party, an employer must confirm with the applicant that the data provided is accurate before making any adverse employment decisions based on that information.  Employers who choose to obtain criminal background checks should keep in mind that both the Fair Credit Reporting Act and the California Investigative Consumer Reporting Agencies Act impose additional requirements upon the use of information provided in such reports. If you have any questions concerning your company’s use of background information in hiring decision or any California’s employment laws, the attorneys at Navigato & Battin are here to...

read more

What You Should Know Before Putting Surveillance Cameras in Your Place of Business

Posted by on Jun 1, 2017 in Newsflash | 0 comments

California employees’ reasonable expectations of privacy are protected by Article I, Section 1 of the California Constitution and by the common law tort known as “invasion of privacy.”  In determining whether particular acts or policies go too far in encroaching on an employee’s privacy rights in an impermissible way, the law requires balancing (1) an employee’s reasonable expectation of privacy with (2) an employer’s legitimate business purpose for the intrusion. When analyzing whether an employer has invaded the privacy of an employee, the court first looks to whether the employer intentionally intruded into a place, conversation, or matter as to which the employee has a reasonable expectation of privacy.  Second, the intrusion must occur in a manner that is highly offensive to a reasonable person. (Shulman v. Group W Productions, Inc. (1998) 18 Cal.4th 200, 231) Courts have consistently held that notice of and consent to an impending potential intrusion can “inhibit reasonable expectations of privacy.” (Hill v. National Collegiate Athletic Assn. (1994) 7 Cal.4th 1, 36.)  Thus, when considering placing surveillance cameras in your place of business, whether for safety or security issues or any other reason, the following guidelines should be followed to minimize any potential liability or claims of invasion of privacy: Mark the Cameras – Well-marked cameras reduce an employee’s reasonable expectation of privacy.  Having a camera plainly visible and located next to a sign stating “recording in progress,” greatly diminishes an employee’s claim of an expectation of privacy.  The courts use a sliding scale- the more obvious an employer is about its video surveillance practices, the less likely a reasonable expectation of privacy exists or will be deemed to have been unlawfully intruded on. Create, Distribute and have the Employee Execute a Clear Workplace Video Surveillance Policy – This can be done by placing a policy in an employee handbook or through a stand-alone policy.  Employees are less likely to have a recognized claim that their privacy rights have been invaded if they are put on notice by a specific written policy that the employer records employees in open work areas.  The policy should include the scope, duration and methods of surveillance.  It should also notify employees that video recordings may be used to monitor work performance and may be used as part of any discipline-related investigation.  Finally, employers should require each employee to sign an acknowledgment that he or she has reviewed and understands the video surveillance policy. Limit the Number of People who can Access the Cameras – Since privacy interests are at play, limit the number of people who can access and control the footage of the surveillance cameras.  If possible, limit access to the CEO and one or two other high ranking (and trusted) employees. Do Not Place Cameras in Sensitive Private Places – Do not place any video or audio recording devices in any bathrooms, locker rooms, or rooms designated by an employer for changing clothes.  Secret cameras can also cause major concerns- at a minimum, the safest and most practical course of action for employers is not to place secret cameras in work areas that employees would not expect to be recorded.  These include offices, cubicles, break rooms, file rooms, etc. If you have questions regarding the use of video surveillance cameras or need assistance in updating your...

read more

Avoid Costly Litigation by Ensuring Your Website is ADA Compliant

Posted by on Jun 1, 2017 in Newsflash | 0 comments

A little over a year ago, we wrote an article, Is Your Website ADA Compliant?, which explained that a business opening itself to and holding itself out to the public must meet certain requirements to remain in compliance with the Americans with Disability Act (“ADA”), which affects not just the physical buildings but a company’s website.  Individuals with various disabilities rely on technology to help them navigate websites or access information contained on those websites, and many commercial websites are not designed to interact correctly and effectively with the assistive technology such individuals utilize.  As a result, many websites fail to incorporate or activate features that enable users with disabilities to access all of the website’s information or elements. When the article was first published, it was more of a cautionary tale.  However, recently litigation concerning non-ADA compliance in commercial websites has really started to ramp up.  Therefore, it is now imperative for companies to assess their websites to ensure compliance or face the increasing risk of litigation, which are extremely difficult and costly to defend. Recently, the Department of Justice (“DOJ”) published an “ADA Best Practices Tool Kit,” which includes website accessibility guidance and a checklist that can be used to verify compliance with the ADA.  The tool kit identifies common website accessibility problems and proposes solutions and other considerations to assist in developing ADA-compliant websites.  It also includes a detailed action plan for making existing web content accessible.  The checklist is intended to guide preliminary assessments of website accessibility, and policies and procedures for maintaining website accessibility. It should be noted that while the tool kit is primarily geared toward state and local governments, which are governed by a separate title (Title II) of the ADA, it will be helpful to companies to begin determining their compliance.  The DOJ has indicated that the same rules significantly impact the website accessibility requirements for companies, which are expected to be issued in 2018.  However, in the meantime, ADA lawsuits are being filed based on the general ADA standards and companies cannot wait until the 2018 requirements are issued to move their websites into compliance. It is far better to spend money now on your IT professional to ensure your company’s website compliance than to be liable for damages and penalties for non-compliance.  As always, if you have any questions concerning your company’s compliance with federal, state or local laws, the attorneys at Navigato & Battin are here to...

read more