In 2014, California passed the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”), which mandated the provision of paid sick leave for employees. On July 13, 2015, amendments to the Act (AB 304) took effect and were designed to clarify some of the ambiguities of the original legislation. The major modifications to the Act include the following: Amendments to rate of accrual. While the Act specified that paid sick leave should accrue at one hour per 30 hours worked, AB 304 gives employers flexibility to institute different accrual methods so long and the time is accrued on a regular... READ MORE

The purchase of an existing business requires a thorough examination of all the information related to that business entity. The goal of this process, known as “due diligence,” is to provide information about the legal and financial state of the business and to reveal potential risks that could impede the future transaction. A comprehensive due diligence review typically warrants the advice of various professionals, including accountants and attorneys, who guide purchasers in the following areas: Financial status. Financial documents, including balance sheets, audited financial statements, income statements, accounts payable and receivable, and tax returns for the past three years should... READ MORE

Non-disclosure and confidentiality agreements are routinely executed between employers and employees, particularly in emerging or highly competitive industries. The goal of the Non-Disclosure Agreement (NDA) is to ensure that employees or independent contractors who obtain proprietary knowledge during their relationship with the business do not use or disclose the information after the relationship has ceased. Similarly, in many states, a Non-Compete Agreement (NCA) restricts an employee from employment in the same field for a specified amount of time and within a certain distance from the former employer. In California, however, a 2008 Supreme Court decision found that NCAs are not... READ MORE

A sole proprietorship is the most common form of business structure. A sole proprietor fully owns and manages the daily operations of the business. He can sell the business at his or her sole discretion. In contrast to other business forms, a sole proprietorship is among the least cumbersome of business structures.  It has few compliance and regulatory obligations, minimal legal costs in the formation stage and very few formal maintenance obligations. Due to its low startup costs and bureaucratic simplicity, new owners of small businesses may be persuaded to start a sole proprietorship. However, there are several significant drawbacks... READ MORE

Most businesses are aware of the value of written employment agreements to establish the roles and responsibilities of employees and address the legal obligations of employees with respect to confidential information upon termination. Employee contracts are an important step in preventing employee-related disputes and should be reviewed periodically as employment relationships and employment conditions evolve. An equally important staple for both large and small businesses is creating and distributing employee handbooks. Although providing employee handbooks is not mandated by law in California, every business in California must have certain employee policies in writing. As such, it is generally accepted as... READ MORE

Under the Nonresidential Building Energy Use Disclosure Program, also known as AB 1103 (AB 1103), any individual who finances, sells or leases a non-residential building in California of a designated size is required to disclose the building’s ENERGY STAR ratings to the opposing party and to report this information to the California Energy Commission (CEC). The purpose of the legislation is to promote greater efficiency in commercial buildings through enhanced disclosure requirements. The reporting of energy use in the affected structures takes into account the consumption of all types of energy, including electricity, natural gas and fuel oil. This program,... READ MORE

When starting a business, serious consideration should be given to forming a limited liability company (LLC). While the key advantage, as its title suggests, is the protection of owners from incurring personal liability for the debts and liabilities of the business, there are several other features that make LLCs a preferred structure for your business. LLC owners may also choose their tax treatment, are subject to less onerous compliance requirements and have increased flexibility. Limited liability. The members of the LLC are not personally liable for the debts of the business. In the event of a judgment, members can lose... READ MORE

The California legislature has taken action to prevent abusive treatment of foreign laborers by California employers in a new law enacted in 2015. The California Foreign Labor Recruitment Law (SB 477) provides protections to foreign workers by restricting certain practices by foreign labor contractors, described as any person who solicits or recruits a foreign worker who resides outside the United States for paid work for employer’s business in California. This legislation is modeled after a previous bill, SB 516, which included employers that directly hired foreign laborers in its restrictions on exploitative employment practices. The current bill, which covers only... READ MORE

If you operate a business and are looking to lease space for your operations, you need to know that the rules that apply to residential tenants are different from those that apply to commercial tenants. Most states, including California, have extensive legal protections for residential tenants in furtherance of the overall public policy of providing safe and secure housing to residential renters. Both federal and state laws are designed to protect the rights of residential tenants, who are deemed to be in an inferior bargaining position vis-à-vis their landlords. In contrast, commercial tenants are regarded as having the same skill... READ MORE

In a recent article Real Estate Takes Its Place as the Fourth Asset Class author David Funk, reflects on the historical shift in institutional investors from viewing real estate as an “alternative investment” to the current trend of many fund managers to permanently shift up to 10% in a portfolio position from stocks, bonds and cash to real estate. “What,” you say?  Less than 10% allocation in real estate investments for large institutional investors?  For family funds or individual investors active in the real estate market 10% seems dismally small.  Those who own significant real estate portfolios prefer real estate... READ MORE