We Are Here for Our Clients and Friends

Posted by on Mar 17, 2020 in Newsflash | 0 comments

March 17, 2020 — We are in the midst of an unprecedented threat brought on by the novel Coronavirus pandemic.  I am writing to let you know that Navigato & Battin, LLP remains ready to assist our clients and our friends during this challenging time. Like you, we are closely monitoring developments related to the coronavirus outbreak and the recommendations and directives coming from various governmental and health agencies including the U.S. Centers for Disease Control and Prevention (CDC) and the World Health Organization.  With our network infrastructure, all of our attorneys have the ability to work remotely. For the time being, most of our attorneys will be working from home; however, clients should notice very little difference in the delivery of our legal and consulting services.  Of course, we are available for telephone conferences as usual.  Where available, we will be utilizing telephonic court appearances and video depositions. Many of our clients are employers and this is an unprecedented and uncertain time for you.  We are available to advise employers on your obligations and your options during the Coronavirus outbreak.  There are many difficult and interrelated legal issues, from termination/layoff, to leaves of absence, to workplace safety compliance.  We are currently preparing an article to try to address some of the bigger and more pressing legal issues and provide you some basic guidance.  However, please call us with any questions about your particular situation. We will get through this.  Please take care of yourselves and each other.   Yours, Mike Battin Navigato & Battin,...

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Exempt Employee Salary Requirement Increased in 2020

Posted by on Mar 2, 2020 in Newsflash | 0 comments

We have written extensively on the labyrinth of California’s wage and hour laws, including the requirements to pay hourly employees minimum wages, provide meal breaks and rest breaks, properly record and pay any and all overtime hours, and provide employees with compliant pay stubs. Some employees, however, maybe exempt from all of these requirements. For a company to avail itself of this exemption pertaining to certain employees, those employees must (1) earn a specified minimum salary and (2) perform duties which fall into a specified classification. The salary requirement for an employee to qualify for exempt status is a bright line rule where there are no exceptions. In California, to be exempt on January 1, 2020, employees working for employers with less than 25 employees must make $54,080 per year. Employees working for employers with 26 or more employees must make $49,920. This minimum salary amount is set to steeply increase in the coming years. By 2024, exempt employees must earn a salary of at least $62,400. If employees meet the salary requirement, they will also need to fit into one of the four exempt categories: professional, executive, administrative, or outside salesperson. The professional category applies to workers licensed or certified and primarily engaged in the practice of law, medicine, dentistry, optometry, architecture, engineering, teaching, accounting, or an occupation deemed to be an “artistic profession.” The executive category applies to workers who manage the company, direct the work of at least two other employees, have the power to hire and fire, and regularly exercise independent judgment. The administrative category applies to workers who perform office or non-manual work related to management policies or general business operations, and who regularly exercise discretion and independent judgment. The coaches and trainers will not qualify for this exemption. The outside salesperson classification is special in that the employee does not need to meet the minimum salary requirement above. Instead, the employee need only make minimum wage. The category applies to employees who are 18 years of age, spend over half of their working time outside of the company’s headquarters, and sell goods or services for the employers. Because of the employee-friendly laws which are currently in place in California, it is a good idea for all employers to regularly conduct an audit of their employees to ensure none are being misclassified as exempt. A non-exempt employee classified as exempt would likely be able to recover for missed meal breaks, missed rest breaks, overtime worked and not compensated, and much more. As we’ve discussed in many articles previously, judgments in these cases can grow exponentially. If you would like assistance in conducting an audit of your workforce or you believe you may be misclassifying an employee, contact us. We can...

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The CCPA is in Effect, is your Website Compliant?

Posted by on Mar 2, 2020 in Newsflash | 0 comments

The California Consumer Privacy Act of 2018 (CCPA or the Act) relates to companies that collect personal information from consumers. The Act arose as a way to override a ballot initiative proposed by a private citizen. As such, the CCPA is recognized as having been rushed through the legislative process and having a number of flaws as a result. The CCPA became effective on January 1, 2020; however, based on the ambiguity of the CCPA as currently written, the California Attorney General is to release guidance memorandums. The CCPA is to be enforced by the Attorney General after July 1, 2020. Between January 1, 2020, and July 1, 2020, the CCPA can only be enforced through a private cause of action. In an increasingly online world where data hacks and privacy breaches are becoming more commonplace, the CCPA aims to put the consumer in more control of his or her personal information collected by certain businesses. A business is subject to the CCPA if the business: (1) collects consumers’ personal information and determines the purposes and means of processing the information and (2) either (a) has a gross annual revenue exceeding $25 million; (b) buys, receives, or sells the personal information of 50,000 or more consumers, households, or devices, (c) or derives 50 percent or more of its annual revenue from selling consumers’ personal information. The Act will also apply to those businesses which control or are controlled by a business which fits one of the above criteria and shares common branding with that business. The CCPA will not apply to your business unless your business satisfies both of these requirements. The CCPA provides consumers with five distinct rights relating to their personal information: (1) the right to know, (2) the right to deletion, (3) the right to opt-out, (4) the right for a minor to give consent via opt-in, and (5) the right to non-discrimination. Every website in 2020 should already have a privacy policy. These policies now must be updated with various provisions related to the CCPA. Specifically, these additions must provide information about the categories of personal information collected during the preceding twelve months; sources from which the business collects personal information; the purpose for collecting or selling personal information; categories of third parties who have received the personal information; and a description of the consumers right to: (a) access and request specific pieces of personal information, (b) obtain individualized disclosures, (c) deletion, and (d) non-discrimination. Additionally, the methods for submitting consumer requests must be listed in the privacy policies, including a toll-free phone number and online submission, as applicable. Finally, the policies must state whether the business sells personal information to third parties. If so, notice of the same must be given in the policy along with notice that the consumer may opt-out and a link to the “Do Not Sell” page. These privacy policies should already be undergoing a periodic review to ensure they are up to date with the business’s practices. The Act now requires the business review and update its privacy policy, and especially the notices listed above, at least annually. After updating its privacy policy and creating notices on its website along with a “Do Not Sell” link, a business must take certain actions to remain compliant with the CCPA. The...

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Using DocuSign® or Similar Programs? Case Cautions Business Owners to Think Twice

Posted by on Feb 3, 2020 in Newsflash | 0 comments

As businesses become more reliant upon technology, the prevalence of DocuSign® is no surprise. The DocuSign® program allows parties to electronically sign documents without having to print, manually sign, and scan documents. This program has streamlined many transactions by allowing parties to simply open the DocuSign® request, insert their signatures where requested, and “complete” the document, which returns the “signed” document to the originator. However, in November 2019, a California Court of Appeal found that when disputed, a document signed through the DocuSign® program may not be sufficient to establish a party’s agreement to certain terms contained therein. Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, involved a woman named Rosa Fabian who had discussed installing and financing solar panels on her home with Renovate America, Inc. Renovate America had contacted Fabian over the phone in an unsolicited sales call. Fabian had already had the solar panels installed on her home, and Renovate America was offering to finance the solar panel system. Fabian claimed she was never presented with any documents to sign, and never had any conversations with Renovate America other than over the phone. When Fabian filed a lawsuit against Renovate America relating to improper installation of the solar panels, Renovate America petitioned the court to move the dispute to arbitration. Renovate America presented a contract including an arbitration clause which had purportedly been signed via the DocuSign® program by Fabian. Fabian denied ever signing the document, either physically or electronically. A Renovate America director testified in a deposition that no Renovate America personnel had been present when Fabian allegedly signed the contract via the DocuSign® program, but based on his “extensive experience” Fabian must have been present and signed the document. To prove Fabian’s signature was indeed authentic, Renovate America needed to present evidence of the content of the contract and the circumstances surrounding the contract’s execution. Renovate America presented two pieces of evidence: Fabian’s printed electronic initials, which the DocuSign® program purportedly authenticates, and a declaration from the employee who had spoken with Fabian. The Court of Appeal found the electronic initials on the agreement were insufficient to establish the formation of a contract because Renovate America failed to provide additional information as to the authentication process used by the DocuSign® program. Additionally, Renovate America did not provide any information to indicate how it verified Fabian’s electronic signature. This type of information would include: who sent the contract to Fabian, how the contract was sent to Fabian, how Fabian’s signature was placed on the contract, who the finished contract was sent to, and how Fabian’s signature was verified by that recipient. The Court of Appeal therefore rejected this argument. The Court of Appeal was similarly unpersuaded by the declaration Renovate America submitted. Specifically, the declaration lacked any substantive information regarding the details of Fabian’s purportedly signing the contract. Instead, the declaration summarily stated Fabian had signed the contract without providing any detail as to how that conclusion had been reached. Renovate America’s bid to arbitrate the dispute brought by Fabian was therefore denied, and Fabian will be allowed to pursue her claim in court. This case should raise eyebrows of those businesses which routinely rely upon the DocuSign® program to complete contracts intended to be binding – especially when those contracts include arbitration clauses....

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Navigato & Battin, LLP Obtains $10 Million Decision After 6 Day Bench Trial

Posted by on Feb 3, 2020 in Newsflash | 0 comments

After a bench trial spanning 6 days of trial in Orange County Superior Court’s Complex Department, Navigato & Battin’s client, Sheila Guarderas, obtained a decision awarding her $10 million and several hundred thousand dollars in pre-judgment interest, in a breach of contract action against former business partner Steve Holmes.  Ms. Guarderas and her company, XccelerateHR, LLC, were also cleared of any liability on all 9 causes of action in Mr. Holmes’ cross-complaint, which sought at least $740,000 from NavBat’s clients.  All in all, the case amounted to a complete victory for Ms. Guarderas. The case raised several issues of complex contractual analysis, fiduciary duty, and indemnification responsibilities, and included expert and percipient witness testimony regarding the formation of the business, the unraveling of the business and its root causes, and the arrangement struck by Ms. Guarderas and Mr. Holmes relating to the disposition of the company’s assets (which formed the basis for the $10 million decision).  Trial counsel Travis M. Bray offered the following: “Mr. Holmes made a deal with Ms. Guarderas and reaped all of the benefits of that deal, but when the time came for him to pay up he denied that he owed a dime and did his best to cover his tracks along the way.  Credibility of the witnesses was a huge factor in this case.  I am glad that we dug up the evidence and got the testimony we needed, both before and during trial, to hold Mr. Holmes accountable for the agreement he made.  It was not an easy road, but Ms. Guarderas had the wherewithal to stick to her guns to see her claims verified by the decision reached by the Court.  After being told for years by someone she had trusted a great deal that she was lying about their arrangement and that she did not have a leg to stand on, it was certainly a nice feeling to deliver news of this hard-fought decision to Ms. Guarderas.” About Navigato & Battin, LLP: Navigato & Battin, LLP is an experienced business law firm.  For over 20 years, Navigato & Battin, LLP has prosecuted and defended multi-million dollar lawsuits, in both trial and appeal settings, as well as alternative dispute resolution processes, such as arbitration and mediation. The firm counsels’ corporate clients in dealing with their organizational, labor, and management issues and has represented both corporations and their principals in a variety of business...

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New Year, New Laws: What Changes Are in Store for 2020

Posted by on Jan 1, 2020 in Newsflash | 0 comments

At the beginning of each year, we round up some of the more game-changing laws set to take effect for your review. This year will provide more protections for employees, from the outset of their employment (with a ban on mandatory arbitration clauses) to the end of a discriminatory work experience (with the window to file an administrative claim for such discrimination expanded from one year to three). As always, employers in California should pay close attention to the vast body of ever-changing employment law. This article provides only a snapshot of some of the important new employment laws going into effect this year. AB 5 – Worker classification We have written about the new landscape of employee/independent contractor classification extensively since the court decision which prompted AB 5 was decided in April 2018. In sum, an employer classifying workers as employees or independent contractors should begin with the presumption that each worker is an employee. If, and only if, the employer can show: (A) the worker is sufficiently free of the employer’s control, (B) the worker is providing services outside the employer’s normal course of business, and (C) the worker actually offers to provide his services to others under his own business name, is it possible that the worker may be considered an independent contractor. This new test was dubbed the “ABC Test” by the California Supreme Court. AB 5 created a variety of exemptions from the ABC Test, which we laid out here. AB 5 also calls for the use of the ABC Test in nearly all areas of employment law, pr Providing a bit more uniformity for employers even while making it significantly more difficult to establish a true independent contractor relationship. AB 9 – Employment Discrimination Statute of Limitations Currently, workers who wish to file various employment discrimination claims against their employers must first exhaust their administrative remedies by filing a claim with the Department of Fair Employment and Housing. This administrative claim had to be filed within one year of the alleged discriminatory action. The short window of time to file led some employees with valid claims to lose their claims for failure to timely file. AB 9 extends this window from one year to three years, a substantial increase in the amount of time within which discrimination claims may be raised. AB 51 – Banning Mandatory Arbitration AB 51 will ban employers from requiring their employees to sign mandatory arbitration agreements in exchange for employment or for employment-related benefits. Those employment-related mandatory arbitration agreements which were entered into before January 1, 2020, will be grandfathered in under this new law. However, any such provisions offered or agreed to by employees in 2020 and beyond will be unenforceable. For employers who currently utilize arbitration agreements with their employees, particularly as a means of restricting exposure to class action lawsuits, this is an important change in the law. While this law is set to go into effect on January 1, 2020, a federal court in California granted a temporary restraining order keeping California from enforcing this law until a future hearing on a more permanent injunction takes place. This ban should remain on employers’ radar, but employers can breathe easy for now. AB 749 – “No Re-Hire” Provisions Invalid Many times, settlement agreements between employers and aggrieved employees...

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Your Business’s New Year’s (Corporate) Resolution – NavBat Offers Free Corporate Wellness Check Up

Posted by on Jan 1, 2020 in Newsflash | 0 comments

It’s that time of year. Time to make New Year’s resolutions. Many resolutions are aimed at improving one’s health. This year we encourage you not only to improve your own health but also the health of your business. To help you follow-through on this commitment, in January, NavBat is offering to conduct a free review of your company’s entity formation and governance documents (corporation, LLC, or LP). We will review your company’s governing documents (Articles of Incorporation, Bylaws, shareholder agreements, etc.), annual minutes, stock ledgers, and Statements of Information and other filings with the Secretary of State. After completing this free review, we will provide a checklist of the tasks we recommend be completed (along with an estimate of fees and costs to complete such tasks) to bring your corporation or limited liability into compliance. You can choose which tasks you want completed, if any, and when. Making sure all corporate formalities are followed improves the health of your business entity, strengthens the corporate shield, improves stakeholder communication, and reduces the risk of personal liability for business debts. To request a review, send an email to briana@navbat.com. We look forward to assisting both our existing and new clients. So what are you waiting for? This year, make a New Year’s (corporate) resolution to have your records reviewed, for...

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Buyers Beware: AB5 May Add More Costs to Purchasing a Business

Posted by on Dec 2, 2019 in Newsflash | 0 comments

It is commonplace for the seller of a business to provide consulting services to the buyer after the sale. Typically, an owner will enter into a consulting agreement whereby the seller will provide transition services after the closing. These transition services include things such as introducing the buyer to vendors, answering questions about the business which may arise post-closing, and facilitating customer relationships. In almost all circumstances, the seller is paid as an independent contractor. This common practice may no longer be viable after the passage of AB5. The Dynamex holding and subsequent passing of AB5 – which is set to go into effect January 1, 2020 – may preclude sellers of companies from providing these services as independent contractors due to the widened definition of what constitutes an “employee.” As we have reported many times now, under Dynamex and AB5, a worker is presumed to be an employee unless the employer can prove (a) the worker is free of the employer’s control, (b) the worker is performing services outside the employer’s normal course of business, and (c) the worker is engaged in a separate business in which the worker provides the same services to others that he is providing to the employer. While there are many exceptions to this new test to classify workers as employees or independent contractors, none are likely to include a former business owner providing post-sale transitional services. Instead, these former owners are likely to fail the second and third prongs of the Dynamex test: (1) the former owners will perform services well within the company’s normal course of business (e.g. communicating with vendors and building customer relations); and (2) the former owners are unlikely to provide these same transitional services to others under the banner of a separate business altogether. Thus, these post-sale transitional services may very well necessitate the former owner to be classified as an employee. In this case, the company should ensure it is paying the former owner according to the Labor Code, including but not limited to paying the former owner at least minimum wage and for any and all overtime. Additionally, the former owner must be provided any and all necessary meal and rest breaks. If a company fails to provide these, the company may become liable for unpaid wages, waiting time penalties, and other fines. The company will also need to file and pay the appropriate taxes on any wages paid to the former owner. Failure to file and pay these taxes can result in steep fines, back taxes, and potential criminal liability. The best approach will depend on the situation. Some companies may decide to forego these post-sale services altogether to avoid any potential liability under AB5. Others may find it more palatable to impose a cap on the post-sale services to be provided. For example, the new and former owners may decide to cap the services at a certain dollar amount of wages, or a certain number of hours. This way, the buyers can weigh the benefit received by the former owners’ services against the cost of the same. (Keep in mind though, an agreement to cap the amount of hours and/or wages of the former owner will not alleviate the responsibility to comply with the Labor Code.) Regardless of which approach buyers take, one...

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Terminating a Lease or Raising the Rent? New Laws Landlords Must Know

Posted by on Dec 2, 2019 in Newsflash | 0 comments

As a residential landlord, there are already a plethora of laws you must know and abide by. On October 8, 2019, California added two more to be aware of. Assembly Bill 1482 (“AB 1482”) provides two new protections for residential tenants: first, landlords may no longer freely enforce “no fault” terminations of residential leases, and second, rent increases are now capped statewide. These laws were enacted to curb the statewide housing crisis which has seen an unprecedented number of Californians living on the streets partially due to unaffordable housing. In 2030, AB 1482 requires the Legislative Analysis Office to release a report on the efficacy of these new laws; this means that for at least ten years, landlords will need to abide by the new rules. Restrictions on “No Fault” Terminations AB 1482 provides protections against “no fault” terminations for those tenants who have lawfully occupied a residence for 12 months or more, with exceptions for certain types of property owners. Residents whose leases are terminated without “just cause” are now entitled to some benefit from the landlord. “Just cause” can be either “at fault” just cause, which revolves around the tenant’s use (or misuse) of the property, or “no fault” just cause. “At fault” just cause includes failure to pay rent, materially breaching the lease, committing waste, using the premises for an unlawful purpose, or perpetrating or allowing criminal activity on the premises. “No fault” just cause includes a landlord’s withdrawal of the property from the rental market (which requires certain conditions be fulfilled), or situations where the landlord’s family intends to or actually does begin occupying the property or the landlord intends to demolish the property. For an at fault termination, the landlord must provide the tenant an opportunity to cure the wrongdoing. In other words, the tenant must be given time to stop whatever actions gave rise to the just cause. For a no fault termination, the landlord, after giving the tenant notice of termination, must provide either relocation assistance or waive rent in the final month of tenancy. The landlord may choose which of these to provide to the tenant. Rent Increases Are Now Capped Beginning January 1, 2020, residential rental rates may not be increased by more than five percent plus the percentage change in cost of living or ten percent total per year, whichever is less. Increases may only be enacted twice in any twelve-month period, and must remain equal to or lesser than the increase cap. This new cap, however, only applies to rent increases for the same tenant – they do not apply when a new lease is signed with a new tenant. At that point, the landlord may raise the rent as he or she so chooses. For those landlords who foresaw the passage of AB 1482 and between March 15, 2019, and December 31, 2019, preemptively raised the rent more than the allowed amount, the tenant’s rent will be amended to the rent applicable as of March 15, 2019, plus the maximum permissible increase under AB 1482. Those landlords who attempted to get ahead of this rent increase cap will not be liable to their tenants for any rent overpayments. This rental cap does not apply to low-income housing, dormitories for higher education students, housing subject to rent control...

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Insurance May Cover Negligent Hiring Lawsuits

Posted by on Nov 1, 2019 in Newsflash | 0 comments

California businesses face enormous obstacles to profitability. One significant obstacle is the never ending threat of lawsuits by customers, employees, and others. A 2018 decision from the California Supreme Court has provided a ray of hope regarding certain types of lawsuits. In August 2018, the California Supreme Court ruled in Liberty Surplus Insurance Corp. et al. v. Ledesma & Meyer Construction Co. Inc., that lawsuits seeking to hold businesses liable for damage caused by its employees may be covered by insurance. The Supreme Court found that the insurance company must cover a lawsuit where there are allegations the business was guilty of negligent hiring. “This latest ruling is welcome news to California businesses. According to founding partner Dan Navigato,” Too often, insurance companies try to avoid paying for lawsuits and claims even when their customers have dutifully paid premiums for years. It is nice to hear the Supreme Court of California is holding insurance companies responsible for claims which businesses legitimately expect to be covered.” The Supreme Court’s ruling provides additional justification for the advice we provide to our clients every time they are the target of a lawsuit or a monetary demand. We tell our clients to notify all of their insurance companies. Some business owners mistakenly believe that notifying their insurance company of a claim (especially when there is a slim chance of coverage) will increase their insurance premiums. This is not typically the case. “Notifying your insurance company of a claim does not typically result in increased premiums. Rather, loss runs (money paid by the insurance company for covered claims) are the #1 reason for increased premiums. In fact, most insurance policies require a business owner to timely notify the insurance company upon receiving a claim.” There is little, to no downside in “tendering” a lawsuit and it is likely a contractual obligation of the policy owner. More importantly, if the lawsuit is covered, the insurance company will pay to defend the claim and any resulting judgment relating to a covered claim. Thus, be a smart business owner, protect your business by notifying all possible insurance companies of all legal demands you receive. If your business is subject to a claim that you believe should be tendered to your insurance company(ies), contact Navigato & Battin for...

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