Uber, Lyft, and Other Companies Back Ballot Initiative to Exempt Gig Drivers From ABC Test California recently amended its Labor Code to protect so-called gig economy workers and mandated that those workers be classified as "employees" as opposed to "independent contractors." See Cal. Lab. Code, §2750.3. This new law [...]

San Diego Business Contract Drafting: Even Apostrophes Matter An interesting decision involving a construction contract was recently issued by the Second District California Court of Appeals. See Regency Midland Construction, Inc. v. Legendary Structures, Inc., Case No. B292602 (Cal. App. 2nd Dist. November 7, 2019). The result of the [...]

What Professions are Exempt Under the Newly Codified “ABC Test” for Independent Contractors? As has been widely reported and discussed, the California State Assembly passed Assembly Bill 5, and Governor Newsom signed, which codified the California Supreme Court's ABC Test for when a worker is to be considered an [...]

Reasons to Form a California Social Benefit Corporation If you are starting a San Diego-based business, you have many options for what type of corporate entity that you can form. The most common choices are a standard corporation and a limited liability company. These are generally used when the [...]

Tips for Drafting an Excellent Company Data Breach Protection Policy With the recent passage and signing by Governor Newsom of Assembly Bill 1130 ("AB 1130") which expands the definition of "personal information" to encompass all types of data that might be used to personally identify customers, patients or clients, [...]

In general, there is a similarity in the way in which California courts interpret California statutes and the way in which courts interpret written contracts. As with contracts, the words used by our Legislators are important -- words matter.

The advantage of obtaining a Certificate of Registration is that the owner of the copyright can then file lawsuits in federal court to prevent infringement and collect damages. Indeed, the owner of a copyright cannot begin a lawsuit without receipt of the Certificate. Legally, the Certificate is presumptive evidence that the copyright is valid and of copyright ownership. However, the Certificate is only a legal presumption.

Starting January 1, 2020, San Diego and California businesses will have expanded notification obligations if there has been a data breach of unencrypted personal information. Your company policies and procedures will need to be updated. If there is a breach, one key fact with respect to the amount and extent of subsequent liability will be the nature, breadth, and effectiveness of your internal privacy protection policies. There are hundreds of data breaches every year and they are expensive for companies experiencing them.

The effective date of the California Consumer Privacy Act (“CCPA”) is January 1, 2020. For businesses and stores in San Diego and California, a new era will commence with respect to their use of in-store video and other consumer tracking methods. One looming question is whether stores will have to cease in-store tracking and surveillance of their customers.

There have been many lawsuits recently filed wherein courts have required that businesses make their respective websites accessible to the blind and visually impaired. The ADA prohibits discrimination against those with disabilities with respect to "public accommodations." See 42 U.S.C. § 12181. The courts have struggled with the issue of website accessibility because websites are not physical locations.

Part of the "due diligence" of a business purchase is to uncover and catalog all of the current, pending, and near-future obligations that are owed by the Seller — those obligations that were incurred while the seller was operating the business. Those obligations should be paid before or at the closing from the proceeds of the sale. Typically, ongoing obligations like rent or utilities are prorated as of the closing date.

In general, all contracts can be terminated. If the contract is silent as to the "how’s and when’s" of contract termination, then the risk of litigation over termination is enhanced. However, termination provisions can largely eliminate this risk in many situations. The key is to differentiate and specify "for cause" and "for convenience" termination.

San Diego and California businesses that operate websites have been confronted with an increasing number of lawsuits concerning website accessibility under the federal Americans with Disabilities Act (“ADA”) and the California Unruh Act. What has been "evolving law" over the last several years has become "settled law." Essentially, businesses must make their websites accessible to the visually impaired if those websites facilitate access to physical locations. The same legal rules will likely apply to any mobile apps operated/owned by your business.

Since the Inwood case, the federal courts have concluded that contributory trademark infringement has two legal elements that must be proven with the second prong having several options. The first element is that some person or entity must commit direct trademark infringement. The second prong that must be proven -- the contributory part of the case -- can be proven one of three ways...

A no rehire provision prohibits a person who has signed a settlement agreement from being hired again by the employer. Sometimes a no rehire provision will be time-limited; but often the clause has no end date meaning a permanent ban from being hired by that employer. However, under this new law -- Assembly Bill 749 -- such clauses are now invalid in settlement agreements.

With respect to website accessibility, the recent decision of the US Ninth Circuit in Domino’s Pizza, LLC v. Robles, 913 F.3d 898 (US 9th Cir. 2019) requires that any business' website must be accessible to the visually impaired if the website is used in connection with a physical location. This ruling is based on the court's interpretation of the federal Americans With Disabilities Act ("ADA") which requires that all places of "public accommodation" be accessible to those with disabilities.

Once again, California has defied the US Supreme Court and has banned employment-related mandatory arbitration. Further, the new act, Assembly Bill 51 ("AB 51"), makes it a misdemeanor crime for an employer to attempt to get employees to sign a mandatory arbitration agreement that is banned by AB 51. AB 51 makes it unlawful for employers to require employees to sign mandatory arbitration agreements as a condition of being employed or continuing their employment. Retaliation for refusing to sign an arbitration agreement is also prohibited.

Prior to Dynamex, the main test for determining the proper worker classification was the "control test." This control test examined various facts related to how much control an employer exercised over the worker. The more control, the more likely the worker should be/should have been classified as an "employee." The Dynamex case overturned the control test and held that the new test would be called the ABC test. The ABC test retains much of the control test as part "A" and adds two additional tests. An employer must satisfy all three tests for a worker to be properly and legally classified as an "independent contractor."

The California Attorney General’s Office finally released proposed regulations to govern how the California Consumer Privacy Act ("CCPA") will be implemented. These proposed regulations will guide how the Attorney General's Office regulates businesses under the CCPA and will be cited extensively by California and federal courts when confronted with legal challenges related to the CCPA. As expected, the proposed regulations offer a lot of extra details, but provide little concrete guidance for businesses that are attempting to comply.

In simple terms, "yes," employee clock-in-clock-out time rounding is allowed under California law as long as the rounding is "neutral" in its application and does not benefit the employer substantially more than it benefits the workers. This is the holding of a recent California Court of Appeals decision.

Trade secrets are protected under both California and federal law. The federal law is called the Defend Trade Secrets Act ("DTSA") and was passed in 2016. It is similar to many state statutes and provides a federal law which can be used to file lawsuits if employees or former employees steal or threaten to steal your business' trade secrets. However, there is a compliance-with-government-request protection provision in the DTSA which requires that certain notices be given.

Before filing a lawsuit concerning employment-related claims of discrimination or harassment (such as sexual harassment), an aggrieved employee first must make a filing with the California Department of Fair Employment and Housing ("DFEH"). The DFEH is the administrative body tasked with overseeing employment discrimination under the California Fair Employment and Housing Act ("FEHA").

Under California law, there are three methods of attempting to prove the joint employer doctrine. If proven, then both, or either, employer may be held liable for any violation of federal or California labor laws. This might include failure to pay overtime or minimum wages or failure to give proper rest breaks, etc. The three methods of proving the joint employer doctrine are:

A recent decision by a federal judge here in California has allowed a class action case against Nestle to go forward based on an allegedly misleading non-GMO label. Two aspects of the package labeling were deemed potentially problematic. First, the labeling indicated that there were no GMO ingredients even though there were potentially GMOs in the ingredient chain upstream from the final ingredient.

In general, here in California, it is "okay" to use so-called "orphan" signature pages for business contracts as long as the parties have in fact agreed to the contract and all of its essential terms. An orphan signature page refers to a separate final page of a contract, where various signature lines are located, which is circulated for original signatures without the whole contract being attached. This one page is signed by the relevant parties and is eventually reunited with the remainder of the whole contract.

Many employers skimp on their job descriptions (or generally avoid doing them). However, this is a mistake, particularly given the heightened protection that California law is providing for workers here in the Golden State. A good and accurate job description is necessary for all of the following legal issues:

At the very basic level, "contracts are promises that the law will enforce." This is the definition provided by WexDictionary run by the Cornell University Legal Information Institute. Legally speaking, here in California and elsewhere, contracts are important precisely because they create legally enforceable obligations.

The new test was adopted by the California Supreme Court in 2018 in Dynamex Operations West v. Superior Court, 4 Cal.5th 903 (Cal. Supreme Court 2018). The new law makes it difficult to classify workers as independent contractors. The law goes into effect on January 1, 2020, and will be retroactive. That means that workers who have been misclassified can seek recovery of unpaid minimum wages or overtime or penalties for untaken meal breaks for the previous three to four years.

As we recently discussed here, the California Supreme Court issued its opinion in OTO, LLC v. Kho, Case No. S244630 (Cal. Supreme Court August 29, 2019), which invalidated an arbitration provision in an employment contract. The case is remarkable in many respects and likely will be an important legal precedent going forward.

San Diego business contracts sometimes contain what are generally called "efforts clauses." Often, these clauses are connected to some approval or resource that one party to the contract must obtain and generally refer to some activity or event that is to occur after the contract is signed. For example, a typical "efforts" clause might be something like this: "Party A will use its best efforts to obtain permitting approval from CITY."

Trademarks and service marks are extremely valuable, and many businesses spend substantial sums of money creating and maintaining trademarks. These are the marks that create the "brand" and help generate consumer loyalty. That loyalty can drive market share and prevent a competitor from becoming profitable. Registering a trademark allows the owner to file a lawsuit in federal court to prevent infringement of the trademark.

The California State Assembly recently passed AB 5 which imposed the so-called ABC test on California employers with respect to how "employees" and "independent contractors" are classified. The author of AB 5 was San Diego Assemblywoman Lorena Gonzalez (San Diego, D). Gonzalez touted the law as an effort to bring fairness to workers in California. AB 5 was aimed at giving "gig" workers the benefits and protections that are afforded to more traditional workers under California's labor laws. Companies like Uber, Grubhub, and Lyft were among the targets of the legislation.

On September 17, 2019, Samsung Electronics received a double-helping of bad news with respect to efforts to force arbitration of consumer class actions related to the Galaxy smartphone. In the first case, the plaintiff filed a class action suit stemming from severe burns allegedly caused by his Samsung phone. See Samsung Electronics America, Inc. v. Ramirez, Case No. 18-16094 (US 9th Cir. September 17, 2019). In the second case, the plaintiff filed a class action alleging false advertising with respect to the marketing of Samsung's phones.

Many San Diego businesses want to protect themselves in the event of litigation with respect to business contracts. Often business contracts contain an attorney fees clause whereby the losing party in the litigation is forced to pay the attorney’s fees and litigation costs of the other party. Under most cases, absent a statute or a contractual provision, if there is litigation, each party must pay its own litigation costs including attorney’s fees. But, by contract, you can require the other party to pay. These are often called "fee-shifting provisions."

Some San Diego employers with workers currently classified as "independent contractors" will likely have to re-classify those workers. One solution that is available is to turn to staffing agencies and contract with such companies to achieve the same flexibility that is obtained by having independent contractors. Essentially, the staffing agency is the employer and will be responsible for providing the employees with various benefits that are mandated by the California Labor Code.

AB 1202 requires any business that collects and "sells" consumer personal data and information must register themselves as "data brokers" with the California Attorney General. Filing a form is required along with a registration fee and the information must be updated annually. The new statute defines a “data broker” as “a business that knowingly collects and sells to third parties the personal information of a consumer with whom the business does not have a direct relationship.”

As with most employment-related questions, the answer is not a clear "yes" or "no." According to a recent decision by the US District Court in the Central District of California, an employee of Union Pacific was properly terminated when his fishing trip vacation photos were posted on Facebook and when the employee -- at first -- was less than honest about being on a fishing trip.

In general, the CCPA applies to any sort of data -- including biometric data -- that is collected by a business about its customers. However, the definition of "customer" or "consumer" is very broad and is not limited to those who may be purchasing goods or services. Thus, many have concluded that employee data and the data collected from employees and about job applicants would be covered by the CCPA. California lawmakers seem to agree and, thus, for the next year at least, employee data was removed from coverage of the CCPA.

In a recent decision, the Oregon Supreme Court held that providing an employee with a negative employment reference can be considered unlawful "retaliation" under Oregon law. See McLaughlin v. Wilson, 365 Or 535 (Or. Supreme Court September 12, 2019). Oregon and California lawmakers tend to take notice of new laws made in each respective state. One wonders if this new legal precedent might soon be followed here in the Golden State.

As with its previous version, AB 51 bans employers from requiring that employees agree to arbitration as a condition of employment. Further, the new law criminalizes any effort to make workers or applicants waive rights to bring litigation or suit for alleged violations of the California Fair Employment and Housing Act (“FEHA”). The FEHA is the main California anti-discrimination statute.

AB 5 codifies, with many important exceptions, the California Supreme Court's Dynamex decision from April 2018. See text of AB 5 here. The Dynamex decision imposed on California businesses a new test for when workers can be classified as independent contractors. The new test is called the ABC test. To properly classify a worker as an "independent contractor," all three parts of the test must be satisfied. AB 5 makes the ABC test part of California's statutory law which effectively prevents Dynamex from being overturned.

Under basic and general rules of contract formation, e-signatures are a valid method of consenting or assenting to a contract. Indeed, one is not required to sign electronically. I "click" on a box on a website that says "I agree" is sufficient for courts to find that a contract has been formed. Thus, the use of a signature block or an image of your signature is sufficient for you to be bound to contract terms.

The Thurston v. Midvale Corporation case is the strongest case to date mandating the legal requirement that business websites be accessible. The Thurston case held that a restaurant's website violated the federal Americans With Disabilities Act ("ADA") and also the California Unruh Act. Of note and of legal importance, the restaurant at issue was held to be liable even though the reservation service was actually handled through a third-party webservice.

A recent case decided by the New Jersey appellate court demonstrates some of the parameters of a successful classification of a worker as an "independent contractor." See Law Office of Gerard C. Vince, LLC v. Board of Review, Case No. No. A-5441-17T2 (N.J. App. September 3, 2019) (non-precedential). The worker at issue was retained under a written consulting contract to provide paralegal work as an independent contractor. When the contract was terminated, she filed for unemployment benefits claiming that she was really an "employee." At the trial level, the employer lost.

Over the last few years, some NLRB administrative judges and courts have held that it is an unfair labor practice to misclassify a worker as an independent contractor when the worker should have been classified as an "employee." The decisions did not look to the intent of the employer or to whether the classification was justified under then-current interpretations of the law. Put another way, an employer who misclassified a worker by mistake was still considered to have engaged in an unfair labor practice.

Registering a trademark, or service mark, is an important part of any marketing strategy of any San Diego business. Trademarks identify your business as the unique commercial source for a product or service and the mark helps retain customer loyalty. Registration of your mark is crucial to protect your marks from being taken by competitors. The process is complex and you should retain an experienced San Diego corporate attorney for advice and counsel leading up to your attempted registration. Here is a quick summary of the process.

Under the federal Americans With Disabilities Act ("ADA"), reasonable accommodations are required for any employee “disability." The term "disability" has been interpreted by the courts to cover emotional disabilities. A recent trend in treating mental health disorders is the use of emotional support animals. Increasingly, it seems that allowing an employee to keep an emotional support animal at work is being defined as a "reasonable accommodation" under the ADA.

A recent case called Anabi Oil Corporation v. Highland Park Oil, Inc., Case No. B283511 (Cal. App. 2nd Dist. August 15, 2019) provides a good example of how words matter when courts evaluate and interpret the contract. In that case, the notable words were "terminate" as opposed to "breach."

In general, trade and service marks must be unique and distinctive enough to identify the commercial source of the goods or services. Descriptive words generally do not function in that manner. In the mind of the consumer, the descriptive words are just that — descriptive words. Likewise, generic words do not function in the minds of the consumer as the identity of the maker/provider of the goods or services.

Most mandatory pre-litigation mediation clauses require some sort of negotiation and mediation within a certain number of days before litigation or arbitration can be filed. In this manner, the effort to negotiate and mediate becomes a precondition -- almost jurisdictional -- to a party's ability to file a lawsuit.

In general, the Federal Arbitration Act protects and encourages arbitration and preempts state laws. The California Supreme Court was forced to dial back Sonic-Calabasas and, instead, ruled that mandatory arbitration was not always unconscionable. If the arbitration provided sufficient procedural safeguards and was equivalent to the kind of hearing one might expect in a court of law, then the mandatory arbitration of wage claims would be enforceable.

Supposedly, the reason for using an AI program to evaluate potential job candidates is to eliminate bias that might be held by human evaluators. But privacy and worker advocates have been concerned about the expansive nature of the evaluation that is done. AI can be programmed to analyze facial expressions and/or eye contact, the speed of a person's response, and other non-verbal cues that are not generally considered relevant to most job applicants.

Under this new law, supervisory employees would be required to have two hours of anti-harassment training (up from one hour) every year and non-supervisory employees would be required to undergo a one-hour prevention training class/video.

The FTC is tasked with enforcing several federal laws including the Federal Trade Commission Act ("FTC Act") and the Consumer Review Fairness Act. The FTC Act prohibited unfair and deceptive business practices and unfair and deceptive advertising. The Consumer Review Fairness Act was enacted by Congress to prevent companies from unduly interfering with consumers' rights to post online reviews.

When Congress enacted the Petroleum Marketing Practices Act, the concern was to prevent arbitrary or discriminatory discontinuance of franchise agreements. The Act gives the franchisee various rights and allows the franchisee to maintain civil actions against any franchisor who violates the Act.

There is a federal law called the Americans With Disabilities Act (ADA) that outlaws discrimination on the basis of disability in “places of public accommodation.” See 42 U.S.C. § 12181(7). The general question that the courts have been struggling with is whether a website is a "place" of public accommodation.

If a San Diego employer violates these meal break laws, employees can file suit and recover the statutory penalties, which are one additional hour of pay at the employee's regular rate of compensation for each work day that the meal period is not provided. In general, this is called the "meal break premium." The meal break premium is due whether or not the employee makes a demand for it.

In general, the covenant does not prevent a franchisor from exercising rights that are expressly provided for in the franchise documents. It is essential to have an experienced San Diego corporate attorney review your franchise agreements to provide advice and counsel.

The CCPA provides consumers with various rights with respect to the data and personal information that is collected on them by businesses operating here in the Golden State. Violation of the CCPA could be very costly. The CCPA allows for the imposition of statutory civil penalties of up to $7,500 per violation per consumer. Even a few violations could result in substantial fines and penalties. The CCPA is a complex and confusing statute.

In a recent case involving unpaid wages, a former employee attempted to use the legal theory of conversion to sue the owners for unpaid wages. See Voris v. Lampert, Case No. S241812 (Cal. Supreme Court August 15, 2019). As a matter of law, a conversion claim can be made against the individual owners and also allows for the imposition of punitive damages against the owner.

In June 2019, Tom Brady filed for a trademark registration for the phrase "Tom Terrific." According to news reports, Brady claimed that he did not like the nickname and that he "... wanted to make sure no one used it, because some people wanted to use it." See USA Today report here. Brady filed an application with the US Patent and Trademark Office ("USPTO") for use of the trademark with respect to t-shirts, football-related memorabilia, and sports collectibles.

A "representation" is a legal word meaning "statement of truth," and a "warranty" indicates that the statement can be relied upon and that, if the statement is false, a lawsuit can be filed seeking damages for the falsity of the statement. Among the advice and counsel that can be provided concerns the representations and warranties, read the article for a list of typical examples.

In today's business environment, four years is a long time and represents a substantial financial risk. As many know, litigation is expensive. Best business practices argue in favor of reducing financial risks by eliminating -- as far as is allowed by California law -- potential lawsuits that may be buried in the "contracts completed" drawer of the filing cabinet. Among the best methods to accomplish this risk-reduction is to truncate the statute of limitations through contractual agreement

Your San Diego business needs a toll-free number if the CCPA applies to your business. More businesses will be subject to the CCPA than you might think. Even a small business -- say only $5 million in revenue -- could be subject to the Act.

One excellent way of reducing the risk of litigation is to only use well-drafted and clear business contracts. A well-drafted and clear contract is not merely about the words used in the contract, but also about the negotiations that lead up to the written contract and whether the contract anticipates potential real-world problems that might occur with respect to the unique situation subject to the contract.

Are you thinking of finally starting that business you have been thinking about? Are you finally going to "make the jump" from employee to owner? The first step is to incorporate. You have a few good options for forming a corporate entity here in California including a standard corporation, a limited liability company, a California professional corporation (for various types of licensed professionals) and others.

Another way that trademarks can be lost is through what is called "naked licensing." "Naked licensing" occurs when you allow others to use your San Diego trademark but do not exercise any control over how and when your trademark, logo, slogan, etc., is used.

Cumulative Rights are any specific right or remedy provided in a contract will not be exclusive but will be cumulative of all other rights and remedies. . Under older legal principles, cumulative remedy clauses were essential because often a contract would specify the remedies that a party might have in the event of a default and, then, courts would deem the listed remedies to be exclusive.

California courts will enforce such clauses, particularly when the clause is subject to actual negotiation between sophisticated parties. If a clause like this is located in a consumer contract, courts will be more exacting in evaluating whether the consumer had meaningful notice of the venue choice.

Per the statute, all corporations must comply, and failure to meet the quotas can result in statutory penalties imposed of up to $100,000 for the first violation and $300,000 for subsequent violations. According to figures released by the California Secretary of State, the act applies to over 500 corporations.

Fingerprinting and facial recognition software are probably the most commonly used biometric data. Many smartphones use facial recognition as a method of locking the phone. That data is stored and privacy advocates are concerned about where that data is stored, the security of that storage, and what other used can be made of the data.

So, what happens if someone forgets to date a document or contract? In simple terms, the parties involved will have to provide evidence of the date of the document from other sources.

Standing is a legal requirement that must be met before a plaintiff can bring a lawsuit and the plaintiff must prove that standing exists. Tightening up the requirements for standing means that fewer lawsuits will be filed which, as noted, can be good for San Diego businesses.

In general, the ADA applies to "places" of "public accommodation" and discrimination based on a disability is prohibited in such places. When the ADA was enacted, there was no internet as it exists now and, as such, the statute did not address -- and still does not address -- whether the internet is a "place of public accommodation."

With startup companies, it is not unusual for there to be a person (or persons) designated to sit on the board of directors who is given the status of "board observer." Venture capitalists and other types of investors commonly seek to have a person affiliated with their investment company placed on the board either as an actual voting member or as an observer.

Under California law, mutual agreement or assent is a necessary element of contract formation. That is, without an agreement, there can be no contract. Under case law and under the California Civil Code, assent may be "manifested" by written or spoken words or by conduct. This is one reason that most contracts are signed.

Non-disparagement clauses in business-to-business contracts have become more and more common. Where a contract is subject to back-and-forth negotiation, non-disparagement clauses are enforceable and important. These clauses are typical in business purchase/merger agreements, shareholder agreements, commercial and office leases and, increasingly, in vendor and supplier contracts.

A buy-sell agreement is essential for small San Diego closely-held corporations. Sometimes a buy-sell agreement is a stand-alone document; often the buy-sell provisions are part of a larger Owners Agreement that sets out the various duties, obligations, and restrictions related to ownership and management of the company. However, whether stand-alone or part of a larger agreement, it is important to seek the advice and guidance of an experienced San Diego corporate attorney when considering what needs to be in a buy-sell agreement.

More Problems With Off-the-Internet Form Contracts: Revisions Affect Validity and Proof Using off-the-internet form contacts is dangerous, particularly if you are running a business. It is essential to retain an experienced San Diego corporate attorney who can ensure that your business contracts are validly formed and enforceable by the [...]