Employee Amber Morgan (Morgan) filed a class action lawsuit against her former employer, United Retail Incorporated (United Retail), for violations of Labor Code section 226.

Labor Code section 226(a) provides, in pertinent part:

Every employer shall, semimonthly or at the time of each payment of wages, furnish each of his or her employees, either as a detachable part of the check, draft, or voucher paying the employee’s wages, or separately when wages are paid by personal check or cash,
an accurate itemized statement in writing showing:

(1) gross wages earned,
(2) total hours worked by the employee, except for any employee whose compensation is solely based on a salary and who is exempt from payment of overtime under subdivision (a) of Section 515 or any applicable order of the Industrial Welfare Commission,
(3) the number of piece-rate units earned and any applicable piece rate if the employee is paid on a piece-rate basis,
(4) all deductions, provided that all deductions made on written orders of the employee may be aggregated and shown as one item,
(5) net wages earned,
(6) the inclusive dates of the period for which the employee is paid,
(7) the name of the employee and his or her social security number, except that by January 1, 2008, only the last four digits of his or her social security number or an employee identification number other than a social security number may be shown on the itemized statement,
(8) the name and address of the legal entity that is the employer, and
(9) all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.

On behalf of a class of herself and current and former non-exempt employees, Morgan alleged that United Retail’s wage statements failed to comply with section 226, subdivision (a) because they listed the total number of regular hours and the total number of overtime hours worked by the employee, but did not list the sum of the regular and overtime hours worked in a separate line. Morgan alleged that the separate line was required by Labor Code section 226(a)(2).

The trial court disagreed and dismissed the section 226 claims. The appellate court concluded that the trial court properly dismissed the claims because United Retail’s wage statements complied with the statutory requirements of section 226 by “showing . . . total hours worked.” The Court reasoned, in part, that the plain language of the statute did not specifically require two separate lines and that the paystubs used by United Retail provided the employees with the essential information for verifying that they were being paid for all hours worked. Morgan v. United Retail Incorporated (July 2010).

While the employer prevailed in this case, the case is a reminder of the strict requirements of Labor Code section 226. Employers must be sure that each and every paystub contains all of the required information to avoid liability. If you have any questions about this case, or other wage and hour issues, please feel free to contact Susan E. Bishop

Susan E. Bishop graduated from the Santa Clara University School of Law in 1996. She specializes in the representation of management in employment law matters. Her practice includes working with nonprofit and for-profit corporations on many issues, including incorporation, employee relations, personnel policies, wage and hour matters, discrimination, harassment and wrongful termination.

To lean more about Susan’s specialties of law, please view her profile under attorneys. If you would like to speak with Susan, please call 408-369-0800.

Does your company use independent contractors to sell your products in the wholesale market?  If so, your company must be aware of the Independent Wholesale Sales Representatives Contractual Relations Act of 1990. 

On June 24, 2010, for the first time, the Second District Court of Appeal of the State of California evaluated the “Independent Wholesale Sales Representatives Contractual Relations Act of 1990” (the Act).  The Act was designed to clarify the contractual requirements between manufacturers and their nonemployee sales representatives (independent contractors).  It applies primarily to independent sale representatives selling on behalf of wholesalers. 

 In Edwin Baker v. American Horticulture Supply, Inc., the Court held that the Act is designed to protect salespersons from both willful and nonwillful failures by companies to comply with the requirements set forth in the Act. 

A.        Written Contract.  The Act requires that the manufacturer and the sales representative enter into a written contract that includes the following: 

              1.  All details of the commission arrangement, including its rate and method of computation;

              2.  The time when the commission will be paid; and

              3.  The grounds for chargebacks, if any.  

B.        Signature and Acknowledgment.  Once the contract is signed, the representative must be provided with a signed copy of the written contract.  The representative must sign that he or she received the copy.

 C.        Commission Explanation.  When the business pays commission, the sales representative must be provided with details of the commission received, including the rate of commission on each order, the customer’s name and invoice number for which each payment is made, and information on any chargebacks. 

D.        Consequences.  The Act provides that any business covered by the Act who fails to pay commissions as provided in the written contract shall be liable to the sales representative in a civil action for compensatory damages or triple the damages proven at trial, depending on whether or not willfulness was found.  In addition, the prevailing party is entitled to recover reasonable attorneys’ fees and costs. 

If your business hires contractors to sell your products, this Act might apply to you.  We would encourage you to seek legal advice to ensure legal compliance, as the penalties for failing to comply may be significant.

Susan E. Bishop graduated from the Santa Clara University School of Law in 1996. She specializes in the representation of management in employment law matters. Her practice includes working with nonprofit and for-profit corporations on many issues, including incorporation, employee relations, personnel policies, wage and hour matters, discrimination, harassment and wrongful termination.

To lean more about Susan’s specialties of law, please view her profile under attorneys. If you would like to speak with Susan, please call 408-369-0800.

Employers in California are generally subject to unemployment insurance taxes on wages paid to employees.  Typically employers, whether for profit or nonprofit, are assigned a tax rate and make regular contributions to cover the occasional unemployment claim made by former employees.  Most employers do not have options when it comes to making those contributions.  Some nonprofits do. 

 The California Unemployment Insurance Code provides that nonprofit organizations recognized by the Internal Revenue Service as charitable organizations in accordance with Internal Revenue Code section 501(c)(3) have two options for covering claims brought by employees for unemployment.

A 501(c)(3) may:

             (1)  Pay the same unemployment insurance taxes paid by for-profit employers (the tax-rate method); or

             (2)  Reimburse the State of California for the full cost of all Unemployment Insurance Benefits paid to their former employees (the reimbursement method). 

             To elect the reimbursement method, a qualified nonprofit must file EDD Form DE1SNP (Selection of Financing Method by a Nonprofit Organization) and EDD Form DE 1NP (Registration Form for Nonprofit Employers) with the Employment Development Department.  An election of the reimbursement method must remain in effect for not less than five (5) years and the Employment Development Department may terminate the election based on delinquent payments. 

             The reimbursement method may be beneficial if a nonprofit employer has had few unemployment insurance claims and expects few in the future.  The tax-rate method makes sense for employers anticipating heavy layoffs or if it prefers predictability with respect to expenses. 

             Nonprofit organizations are encouraged to seek legal counsel to ensure that all of the appropriate paperwork is submitted before commencing the reimbursement method.  The penalties for failing to properly elect the reimbursement method can be significant.

           Note:  State Disability Insurance contributions by employees are required under either method, as are personal income taxes. 

 

Susan E. Bishop graduated from the Santa Clara University School of Law in 1996. She specializes in the representation of management in employment law matters. Her practice includes working with nonprofit and for-profit corporations on many issues, including incorporation, employee relations, personnel policies, wage and hour matters, discrimination, harassment and wrongful termination.

To lean more about Susan’s specialties of law, please view her profile under attorneys. If you would like to speak with Susan, please call 408-369-0800.

This seminar will provide business owners with valuable ways in which they can protect themselves and reduce wage and hour liability. From learning how to classify workers as independent contractors or employees to reviewing the main criteria for deciding whether an employee is or is not exempt from overtime laws, to covering the new meal and rest period requirements, this seminar will cover it all. Business owners should not miss this great opportunity to learn about how employment laws can impact their bottom line. Presented by employment attorney Susan E. Bishop of Pratt & Associates.

Lunch provided by Eulipia Restaurant and Bar

Location
Silicon Valley Chamber of Commerce
Chamber Office
101 West Santa Clara Street
San Jose CA 95113
September 9, 2010
11:30 to 1:30

Susan E. Bishop graduated from the Santa Clara University School of Law in 1996. She specializes in the representation of management in employment law matters. Her practice includes working with nonprofit and for-profit corporations on many issues, including incorporation, employee relations, personnel policies, wage and hour matters, discrimination, harassment and wrongful termination.

To lean more about Susan’s specialties of law, please view her profile under attorneys. If you would like to speak with Susan, please call 408-369-0800.

California’s Harassment Training and Education Law — more commonly called Assembly Bill 1825 Regulations or simply AB 1825 — mandates that employers with more than 50 employees provide training in sexual-harassment prevention to supervisors every two years. Also, new hires into management and those promoted into management must be trained within 6 months of hire or promotion.

Pratt & Associates will come to your office to present the legally mandated two-hour training to supervisors and managers for as low as $70 per supervisor or manager (minimum of 10 attendees, travel outside of San Jose area is extra).

Contact attorney Susan E. Bishop about setting up a training in your office.

Susan E. Bishop graduated from the Santa Clara University School of Law in 1996. She specializes in the representation of management in employment law matters. Her practice includes working with nonprofit and for-profit corporations on many issues, including incorporation, employee relations, personnel policies, wage and hour matters, discrimination, harassment and wrongful termination.

To lean more about Susan’s specialties of law, please view her profile under attorneys. If you would like to speak with Susan, please call 408-369-0800.

No matter what type of business you are preparing to start, one of the first decisions you need to make is what you’re going to name your business. Choosing a name is often something that business owners don’t realize needs more research than just finding a name that is memorable and will appeal to both them and their clients.

 Why go to all this effort?

You’re opening your business with plans of success, knowing you will be investing yourself, your time, and your effort into growing your business. Generally, you won’t be notified of any disputes related to your name until your business has grown and become successful, after you have spent time and energy getting your name known. Don’t lose this valuable piece of your business when it really means something to you because you didn’t research whether you could use it at the beginning. Trademark litigation is costly; a search determining whether you name will be rightfully yours is not.

 1. Type and Scope of Your Business

 The type and scope of your business will normally define how much work needs to be put into research surrounding your proposed business name. For example, if your new business is going to be the local diner branding your name, with no plans to expand outside your neighborhood, that should justify sticking to just your city and county. If you’re planning on selling party supply goods through a mail-order or internet catalogue, that may call for a full scale search of local and national usage since you’re be selling nationally.

At a minimum, your search should include every county in which you plan to do business. At the other end, your search may end up involving a complex multi-jurisdictional search of other business names in various jurisdictions of trademarked or protected intellectual property interests.

 2. Fictitious Business Names Registries

If your business is going to be a local one, check the fictitious business name registry with the county clerk for each county your business is likely to do business in. This includes counties you may expand to if your business will be a success. I do not know of any integrated database that has listings of fictitious business names for every county; a search must be done on a county-by-county basis.

 3. Business Name Search with the Secretary of State

The California Secretary of State maintains a listing of certain business names. You can check their website with their search function to see if there is already a corporation, limited liability company, limited partnership or limited liability partnership with a name that is confusingly similar to what you are hoping to use. Picking a name that is confusingly similar to another registered name may lead to a protracted tradename dispute down the line.

 4. Federal and State Registrations

Filing a fictitious business name required by California Business & Professions Code Section 17910 establishes a rebuttable presumption that the registrant has the exclusive right to use that name as a trade name in the county where the statement was filed.

What happens when there are two of you using a similar name? If you have a fictitious business name registration (a “dba”) and there is a corporation or limited liability company in the same county with a name similar to yours, whichever one filed first and is actually engaged in a trade or business using the name is entitled to the presumption of priority against the other.

 5. Specific Entity Name Requirements

 If I’m not a corporation, can I put an “Inc.” or “Incorporation” or “Corp.” or “Corporation” after my name?

 No. You’re not allowed to use a name that may be confusing to the general public.

 What about “LLC” or “Limited Liability Company” for my sole proprietorship?

 No. Only a limited liability company can use “LLC” or “Limited Liability Company” or “L.L.C.”

 You’re not allowed to pick a name for your business that will end up confusing people who look at your business name.

6. Reserve Your Business Name if There Will be a Delay in Filing Your Formation Documents

Reserving your name with the Secretary of State is a simple and inexpensive matter. Ideally, when you decide on a name after conducting the research I’ve described above, you should go through the effort of reserving with the Secretary of State. If you anticipate doing business in states other than California, reserve your name there as well.  The Secretary of State will issue a certificate of reservation which should provide sufficient time to finish your business formation.

 7. Will a Fictitious Business Name Statement Be Required?

A fictitious business name statement must be filed with the county clerk if you are regularly doing business under a fictitious business name (or a “dba”). You can file a fictitious business name statement in the county that your business has its principal place of business, within 40 days of the date you first began conducting business under that name. You may also wish to file a fictitious business name statement in other counties where you will transact business now and in the future.  Once you filed the fictitious business name statement with the county clerk, you must publish the name with a newspaper in the same county within 30 days of filing the statement, once a week for 4 consecutive weeks, with five days between each date of publication. Most metropolitan areas have papers that do this for a nominal sum. Afterwards, you must file an affidavit of publication with the county clerk within 30 days after completing your publication run. A fictitious business name statement will expire five years after the date you first filed it in the county recorder’s office, at which point you’ll need to refile.

Elena Rivkin Franz, attorney and counselor-at-law, is licensed to practice in all California court and the United State District Court of Northern California. During law school, she was a judicial extern for Judge James Ware of the Federal District Court in the San Jose Division.

To lean more about Elena’s specialties of law, please view her profile under attorneys. If you would like to speak with Elena, please call 408-369-0800.

What legal requirements apply to all businesses?

 

*Annual statement of information (officers, directors, and agent for service of process) and filing fee to the secretary of state (except sole proprietors and general partnerships).

 

*Taxes – annual franchise tax fee (except sole proprietor and general partnership), state and federal tax returns, employment taxes, sales and use taxes, personal property taxes.

 

*Local business license, professional licensing

 

*Federal Employment Identification Number

 

*Insurance – unemployment and workers’ compensation, liability, etc.

 

*Qualification to do business in other states if you do business elsewhere.

 

 

How to avoid personal liability?

 

1. Form an entity.
2. Avoid personal guarantees.
3. Observe appropriate formalities for the entity.
4. Remit all taxes withheld or collected.
5. Carry insurance.

 

Protecting Intellectual Property

 

1. Identify trade secrets and take steps to protect them.
   1. Trade secret defined as “(1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. 
2. Identify and protect creative works through copyrights.
3. Identify and protect distinctive phrases, logos and branding items through trademarks (or service marks). 

  

Buy-Sell Agreements

 

An agreement document how you or another owner can leave the business if one of you moves out state, goes to a new line of work, becomes physically or mentally disabled, dies, wants to sell to an outsider, or seeks to buy out a co-owner’s interest. 

 

What can happen if you don’t have a buy-sell agreement?

            *You may be forced to work with and share control of the company with someone you don’t know.

            *You may end up working with a family member of a deceased or divorced owner.

            *If you die, your survivors may end up stuck in a business they don’t want.

            *You may end up arguing with a co-owner on the price of the company.

 

Business Contracts

 

What makes a valid contract? An agreement, consideration and acceptance, and sometimes a writing.

 

Things to include in the contract:

 

            *Names and addresses of the parties

            *Date the contract is signed

            *Short preamble, i.e. background or recitals

            *What each party promises to do

            *When the work will be done or the product delivered

            *How long the contract will remain in effect

            *The price – or how it will be determined

            *When payment is due

            *Warranties

            *Conditions on how you can terminate the agreement

            *Liquidated damages if performance is delayed or defective

            *Whether or not a party can transfer their interest in the contract to another

            *Resolution of disputes through arbitration or mediation

            *Who will cover attorney’s fees and costs if a party breaches

            *Where notices of default and other communications can be sent

            *What state law applies if questions about the contract arise. 

 

Choosing an entity

 

Do the parties need limited liability?

 

	Yes	No
Sole Proprietor (dba)		X
General Partnership		X
Limited Partnership	X
Limited Liability Company (LLC)	X
Limited Liability Partnership (LLP)	X
S Corporation	X
C Corporation	X

 

Do the parties want profits and losses to pass through to their personal income tax returns?

 

	Yes	No
Sole Proprietor (dba)	X
General Partnership	X
Limited Partnership	X
Limited Liability Company (LLC)	X	X
Limited Liability Partnership (LLP)	X	X
S Corporation	X
C Corporation		X

 

Will all of the parties be actively involved in management?

 

	Yes	No
Sole Proprietor (dba)	X
General Partnership	X
Limited Partnership		X
Limited Liability Company (LLC)	X	X
Limited Liability Partnership (LLP)	X	X
S Corporation	X	X
C Corporation	X	X

 

Elena Rivkin Franz, attorney and counselor-at-law, is licensed to practice in all California court and the United State District Court of Northern California. During law school, she was a judicial extern for Judge James Ware of the Federal District Court in the San Jose Division.

To lean more about Elena’s specialties of law, please view her profile under attorneys. If you would like to speak with Elena, please call 408-369-0800.

If you are a small business owner with consistent legal needs, our Virtual In-House Counsel services are a cost-effective option for your business.  You can have the benefits of an in-house legal team, without the expense and overhead.

We will manage your legal affairs so that you can concentrate on running your business.  We provide personalized and responsive legal advice that may be customized and adapted to the issues your company is facing.

This service is set up on a quarterly payment basis.  You can receive continual access to an attorney and still stay within a predetermined budget.  Signing up for the Virtual In-House Counsel service will allow you to receive legal advice at a 25% discounted block rate for anything from transactional matters, contract review and drafting, risk management, and litigation strategy.

This flexible approach allows us to combine traditional legal services that keep a business owner’s budget in mind.  It allows you to have an attorney familiar with your business, who is just a phone call or email away.  Our attorneys are well-versed in varied areas of law, including:

- Business transactions,

- Corporate governance,

- Employment law

- Real estate law,

- Lending and collections,

- Insurance issues,

- Litigation, and

- Non-profit law.

If you are interested in learning more about this service and whether it would be a good fit for your small business, please contact us at (408) 369-0800.

Elena Rivkin Franz, attorney and counselor-at-law, is licensed to practice in all California court and the United State District Court of Northern California. During law school, she was a judicial extern for Judge James Ware of the Federal District Court in the San Jose Division.

To lean more about Elena’s specialties of law, please view her profile under attorneys. If you would like to speak with Elena, please call 408-369-0800.

If you would like to speak to one of our attorneys specializing in this area of law, please call us at 408-369-0800 or click on “contact” to send us an email message. We look forward to hearing from you.