Table of Contents

• What a buyer should watch for in an asset purchase transaction involving personal information.
• What should the buyer do to prevent liability in an asset purchase transaction?

What a buyer should watch for in an asset purchase transaction involving personal information.

Over the past decade the importance of personal information as a separate asset in M&A transactions, and in particular asset purchase agreements, has increased drastically.

The reason for that is that many companies involved in M&A transactions collect some sort of personal information from their customers, users, clients, employees, etc.

Even collection of minimal information, such as names and email addresses, is enough to trigger compliance with the applicable data protection laws.

Even when the personal information is not one of the main assets being sold in an asset purchase transaction, there could be multiple state and federal privacy and data security laws that need to be taken into account by the seller and the buyer.

What should the buyer do to prevent liability in an asset purchase transaction?

1. During the due diligence process the buyer should request that all data protection and privacy documentation be included in the data room, so the buyer can conduct proper due diligence. During the due diligence process the buyer should look to identify:

• what type of personal information the seller has been collecting, from what subjects (customers, users, employees, etc.) and if there is any sensitive information collected or other information that is subject to stricter regulations.

• examine and evaluate the seller’s privacy policy, whether it is compliant with the applicable legislation and whether it provides all required disclosures for collection and processing of personal data and also the required consents regarding the contemplated transaction (i.e. it if allows personal data to be transferred from the seller to the buyer);

• evaluate seller’s privacy practices and the information security policies, measures, and procedures that seller has in place (for instance requesting information about data security measures implemented by the seller, how personnel is trained, if the seller has procedures to respond to consumer requests, etc.) The ultimate goal of this evaluation is to find out whether the seller’s privacy practices adequately reflect the disclosures and representations made in the seller’s privacy policy.

• find out whether the seller has experienced any security breaches, incidents and threats and how such have been handled.

2. During the negotiations of the asset purchase agreement, the buyer should make sure to include warranties and representation regarding the seller’s compliance with the applicable data protection legislation and seek indemnification for consumer or customer claims related to personal data in order to ensure that buyer is not taking on any potential data privacy-related liability, including potential liability for a past data breach.

3. Post-closing considerations – once the transaction is completed, the buyer needs to make sure to be able to adequately comply with the seller’s privacy policies and implement the required privacy practices in order to avoid data security liability occurred after the closing date.

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Table of Contents

• Upon Hire:
• Upon Termination:

At 91���� PC, one of the first things we advise startups is to ensure they have a robust Trade Secret protection plan.

The best method for limiting the misappropriation of a Company’s Trade Secrets is to take a proactive approach upon hire.  However, there are also methods for ensuring Trade Secret protection after hire at termination.  We will discuss some of these methods below.

Upon Hire:

We recommend that the Company begin by requesting that the new hire return all their previous employer’s confidential information and property before starting the new job, including:

    ○ Copies of any work product

    ○ Customer lists

    ○ Business or marketing plans

    ○ Employee handbooks

    ○ Access badges or cards

    ○ Keys

    ○ Computers

    ○ USB drives, flash drives, or external hard drives

    ○ Phones

    ○ Company credit cards

The Company should also ensure that the new hire is not under any pre-existing confidentiality obligation or other restrictive covenants, and if so, to bring that to your attention to determine whether or not it is enforceable.

Next, we recommend that all new hires receive the Company’s Confidentiality policy (and if there is not one in place, you should have the Company’s attorney draft and disseminate the policy before the new hire begins).

  You should also require new hired to acknowledge receipt of the policy and ask questions if they are unclear.

 New hires should also sign a Confidentiality Agreement which prohibits the receipt, copying and disclosure of confidential or trade secrets learned while under the Company’s employment.

There should also be special technical measures to protect electronic information involving the Company’s computers, phones and other electronic devices. 

Third Party access should also be curtailed in the event that Company equipment is lost or stolen. 

Training for supervisors onboarding new employees should also be provided on at least an annual basis. 

Advise new hires to return their former employers’ confidential information and property.

New hires should return their previous employer’s confidential information and property on or before their last day of employment with the previous employer.

Such information and property may include, among other things.

Upon Termination:

If the above polices have not been implemented and the Employee is being terminated, then we recommend the following:

1. Have your corporate counsel prepare a Separation Agreement which requires at the minimum the following:
2. Severance pay as consideration to enforce a restrictive covenant for departing employee
3. Return of all proprietary materials
4. Cooperation in ongoing and future litigation
5. Conduct and Exit Interview if Possible
6. Review the Confidentiality Agreement and Policies

• Review departing employee’s servers and files to ensure that all confidential information is preserved properly.

• Revoke departing employee’s access to servers, files, and social media accounts.

If you would like assistance in preparing Confidentiality Polices upon hire or if you need assistance after terminating an employee, please reach out to Corporate attorney Kristina Pedroso at Kristina@sutterlegal.com.

The post How to limit employees from stealing your Company’s Trade Secrets upon hiring and termination. appeared first on 91���� Business Law Firm.

Table of Contents

• Employment Act No. 5 (AB5): An overview
• The impact of Labor Law No. 5 on companies
• Strategies for companies to deal with Labor Law No. 5
• In summary

California has seen significant growth in the gig economy in recent years.

This model relies on freelancers working flexibly on specific projects rather than committing to a full-time job.

This shift has led to the emergence of major companies such as Uber, Lyft, and DoorDash that rely on an independent workforce to provide their services.

There has been a great deal of legal debate about the classification of these independent workers.

With the intention of providing gig economy workers with more protections and access to traditional labor rights, California passed AB5 in 2019.

This regulation included stringent requirements for categorizing independent contractors, which alarmed businesses that depend on this business model.

Employment Act No. 5 (AB5): An overview

A worker must pass a three-part test outlined in Labor Code No. 5 in order to be recognized as either an employee or an independent contractor.

According to the criteria, an employee cannot be considered an independent contractor unless all three requirements are satisfied:

• The worker should be allowed to choose his own timetable and methods for completing the work; the corporation or employer should not regulate how it is done.
• The work most not be related to the company’s regular business operations: The employee’s work must not be related to the company’s main line of business. For instance, a driver employed by a private transportation firm would be classified as an employee, whereas an accountant might be classified as an independent contractor.
• The employee runs a separate business: The employee needs to run a separate, self-contained business, which entails having a registered firm or having the capacity to collaborate with other businesses.

The gig economy in California has been severely impacted by the passage of Labor Code 5.

The new regulations have made it difficult for many businesses to categorize their employees, which has raised worries about rising expenses associated with benefits that employers are required to provide, like Social Security and the minimum wage.

The impact of Labor Law No. 5 on companies

Businesses that use gig workers have been impacted by Labor Law No. 5 in a number of ways, including:

1- Expense increases: Businesses are now required by Labor Code 5 to classify a large number of people who were previously independent contractors as employees.

Businesses now have more responsibilities as a result, such as paying the minimum wage, covering sick leave, contributing to social security, overtime payments, tracking hours, and paying payroll taxes.

2- Less flexibility: Labor Law No. 5 offers employees greater protections and rights, such as the capacity to organize unions and bargain collectively over pay.

This may make it more difficult for businesses to manage their personnel and decrease operational flexibility.

3- Finding workers: The application of Labor Law No. 5 can make it more difficult for businesses to locate independent contractors.

To preserve flexibility and autonomy in determining their own work schedules, some employees might opt to operate as independent contractors.

Strategies for companies to deal with Labor Law No. 5

Companies must create plans to comply with Labor Law No. 5 to be in compliance and to limit liability.

Here are some tactics that companies may want to think about:

• Reassessing worker categorization: To begin, a thorough analysis of the current worker classification must be carried out. To be classified, employees must satisfy the three requirements outlined in Labor Law No. 5 by their employer.
• Restructuring ties with workers: Businesses may need to reorganize their relationships with certain workers in light of the worker classification modification. A business might, for instance, create new employment contracts that offer workers certain benefits while still classifying them as independent contractors, or it could decide to convert some independent contractors to full-time or part-time employees (a move that should be made carefully and after consulting legal counsel).
• Using Temporary Staffing Businesses: Employers who require temporary labor might source personnel from temporary staffing businesses. Because these workers are considered to be employees of the temporary employment agency, the hiring company is released from some Labor Law No. 5 requirements.
• Gaining access to exceptions: Labor Law No. 5 has certain exceptions that are applicable to specific worker groups. For instance, certain professionals are immune from the law’s restrictions, including doctors, attorneys, and financial advisors. Companies need to find out whether of their employees are eligible for any kind of exception.
• Reassess of operational procedures: Businesses may need to reassess their operational procedures in light of Labor Law No. 5’s implementation. For instance, a business might need to alter the way it sets up work schedules and tasks employees.
• Keeping abreast of legal developments: There is still discussion about Labor Law No. 5. It is imperative for organizations to remain up-to-date on any recent law modifications or interpretations that may impact the classification of workers. You can accomplish this by speaking with an attorney that focuses on employment law.

In summary

The California labor market has seen substantial changes as a result of Labor Bill 5.

It will be difficult for companies that depend on gig labor to adhere to the new requirements and lessen the negative effects of the law on their operations.

However, businesses can still profit from the gig economy while maintaining legal compliance by adopting strategic measures and reorganizing employment relationships.

If you need legal advice call 91���� a San Francisco Business Attorney Firm for a Free consultation.

The post California’s Gig Economy: Navigating AB5 and Its Impacts on Businesses appeared first on 91���� Business Law Firm.

Table of Contents

• Introduction to Remote Work Compliance
• Meal and Rest Breaks
• Overtime Regulations
• Reimbursement of Work-Related Expenses
• Data Privacy and Security
• Office Ergonomics and Safe Workplace
• Inclusivity in Remote Work Policies
• Record-Keeping
• Conclusion

As the concept of remote work transitions from a mere possibility to a preferred norm for many businesses and their employees, understanding the nuances of California’s employment laws becomes increasingly crucial. 

In the Golden State, legislation designed to protect workers extends into the virtual workplace, requiring both employers and employees to be well-versed in their rights and responsibilities. 

We hope that this blog post serves as an educational cornerstone to shed light on the legalities of remote work under California law.

Introduction to Remote Work Compliance

The rise of remote work arrangements has prompted many questions about employment law compliance. 

Employers must ensure that remote employees receive the same legal protections as in-office staff. 

This includes adherence to laws concerning meal and rest breaks, overtime, paid time off, and work expense reimbursement, irrespective of the employee’s physical location.

Meal and Rest Breaks

Under California labor laws, remote workers are entitled to one 30-minute meal break if they work more than five hours in a day. 

If the working stretch surpasses ten hours, a second meal period is mandated. Additionally, for every four hours of work or a major fraction thereof, employees must be given a 10-minute rest period.

It is incumbent on employers to ensure that these breaks are not only offered but taken, as neglecting to enforce break policies can result in penalties. However, an employee working remotely may agree to waive these breaks under specific circumstances, much like in a traditional workspace.

Read also: How to Let an Employee Go? The Do and The Don’t

Overtime Regulations

California’s robust overtime regulations stipulate that any work over eight hours in a single workday, over 40 hours in a workweek, or for the first eight hours on the seventh consecutive working day in a week is assessed at one and a half times the employee’s regular rate of pay. 

Work exceeding 12 hours in any one day or over eight hours on the seventh consecutive day of work is compensated at double the regular rate.

These overtime rules remain firmly in place for remote employees, and employers must maintain accurate records of all working hours and ensure that overtime pay is disbursed appropriately.

Reimbursement of Work-Related Expenses

For telecommuting employees, California Labor Code Section 2802 requires employers to compensate their staff for necessary expenditures or losses incurred as a direct consequence of discharging job duties. 

This encompasses remote work requisites such as internet access, mobile phone usage, and other technology costs that are reasonable and necessary for their work.

Employers need to establish clear policies detailing what constitutes reimbursable expenses and the process for seeking such reimbursements, allowing for transparency and consistency.

Data Privacy and Security

Remote work brings about specific challenges in safeguarding sensitive information and upholding data security. 

Employers are responsible for ensuring that remote work arrangements adhere to data protection laws such as the . 

This may involve implementing secure virtual private networks (VPNs), enforcing data encryption, and educating remote employees on data privacy best practices.

Office Ergonomics and Safe Workplace

While an office’s physical ergonomics are often meticulously curated by employers to reduce the risk of workplace injuries, remote workers must also be afforded the knowledge and resources to create an ergonomic home office. 

Although California does not have specific laws governing home office setups, employers may still be held responsible for work-related injuries that occur in the home workspace. 

Therefore, guiding ergonomic practices remains not only in the interest of employee welfare but also as a preventative measure against potential workers’ compensation claims.

Inclusivity in Remote Work Policies

Remote work policies must be free of discrimination and afford equal opportunities to all employees. 

Employment decisions concerning remote work suitability need to be job-related and consistent, keeping any form of implicit bias in check to ensure compliance with both federal and state anti-discrimination laws.

Record-Keeping

Employers must meticulously document work hours, rest and meal periods, and overtime for remote employees, much as they would for on-site personnel. 

Clear guidelines should be provided to remote workers on how to record their time and submit their documentation, with appropriate systems in place to facilitate this process. We recommend using time tracking software with mandatory mean and rest breaks, or you could have your startup employees submit manual time sheets with their meal and rest times check off on a daily basis.

Conclusion

The legal landscape for remote work in California is intricate and multi-faceted, reflecting the state’s commitment to worker rights across all mediums of employment. 

Employers must diligently apply these laws to the remote work setting, and employees must remain cognizant of their rights and entitlements.

At 91����, we have experienced employment attorneys who can guide your business or startup through California’s complex employment law framework. 

Whether you need assistance formulating a remote work policy, understanding regulations, or ensuring compliance, our legal team is adept at addressing your business’s unique circumstances with sophisticated and comprehensive legal solutions.

For assistance with California employment law compliance within the remote work paradigm, contact 91����. Our expertise attorneys are at your service to navigate the nuances of remote work and maintain the legal integrity of your business operations.

The post Remote Work Legalities: Ensuring Compliance with California Employment Laws appeared first on 91���� Business Law Firm.

Table of Contents

• Introduction
• California’s Legal Position on Non-Compete Agreements
• Exceptions to the Rule
• Penalties for Enforcement Attempts
• The Importance of Tailored Non-Solicitation Agreements
• The Role of Trade Secret Law
• Best Practices for Employers
• Protect Trade Secrets Proactively 
• Conclusion

Introduction

The legal landscape regarding non-compete agreements in California presents a unique challenge for employers. 

Known for its employee-friendly laws, California stands out for its stringent stance on such agreements. 

As a business law firm advising employers across the Golden State, 91���� recognizes the importance of staying informed about the intricacies of non-compete clauses. 

This comprehensive guide unpacks the current legal position in California and provides essential pointers for employers seeking to navigate this complex area of employment law.

California’s Legal Position on Non-Compete Agreements

Under California’s Business and Professions Code Section 16600, non-compete agreements are, for the most part, void and unenforceable. 

This section asserts that every individual has the right to engage in a lawful profession, trade, or business of their choice. 

Consequently, agreements that restrain anyone from exercising these professional rights are against California’s public policy.

Exceptions to the Rule

Notwithstanding the general prohibition, there are narrow exceptions where non-compete clauses may hold up in California courts. 

Specifically, there are instances related to the sale of a business or dissolution of a partnership where such agreements can be deemed enforceable. 

These exceptions pertain to:

1- If an employee sells their ownership interest in a business and agrees not to compete, to protect the value of the business or goodwill being sold.

2- When a partner agrees not to compete in anticipation of the dissolution of a partnership or the departure from that partnership.

Penalties for Enforcement Attempts

Employers should be cautious about attempting to enforce non-compete agreements as California law, particularly Senate Bill 699 and Assembly Bill 1076, imposes penalties for doing so.

These statutes state that attempting to enforce a void non-compete clause can result in significant legal repercussions. 

Employers may face fines and could be ordered to pay the legal costs associated with defending against such unenforceable provisions.

The Importance of Tailored Non-Solicitation Agreements

While non-compete agreements are generally off the table, non-solicitation agreements can sometimes be used judiciously in California. 

These agreements must be narrowly tailored and focus on protecting legitimate business interests without preventing someone from earning a living in their chosen field. 

Such interests may include safeguarding trade secrets or proprietary information.

Read Also: Navigating Legal Challenges in AI Startup Funding Rounds

The Role of Trade Secret Law

Trade secret law often intersects with non-compete discussions in California. 

Employers can and should protect their trade secrets by other legal means. 

Confidentiality agreements that prevent the disclosure of trade secret information are both lawful and crucial for guarding intellectual property and can provide a measure of protection in place of a non-compete clause.

Best Practices for Employers

Avoid One-Size-Fits-All Approaches: Employers should refrain from using generic non-compete agreements that are enforceable in other states but are void in California.

Customize Non-Solicitation Agreements: Tailor any non-solicitation clauses carefully to align with California law and ensure they focus on specific legitimate business interests.

Protect Trade Secrets Proactively

Implement robust confidentiality agreements and trade secret policies to protect proprietary information without infringing on employees’ rights.

Stay Informed on Legal Developments: Employment laws are constantly evolving. Employers should keep abreast of the latest developments and rulings to ensure compliance.

Conclusion

In California, the approach to non-compete agreements is clear: they are disfavored and mostly unenforceable, with only limited exceptions. 

Employers who wish to protect their businesses must navigate within the confines of California law, utilizing non-solicitation agreements and trade secret protections instead of traditional non-compete clauses. 

At 91����, we are committed to providing our business clients with informed and cutting-edge legal advice that aligns with California’s employment landscape. 

By staying vigilant and informed, employers can strike the right balance between protecting their business interests and respecting their employees’ rights to work. If you would like a free consultation with one of out business attorneys please don’t hesitate to reach out to us at Hello@sutterlegal.com or 415-341-2888

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Table of Contents

• 1- Founder(s)/CEO
• 2- Management Team/ C-Suite Executives
• 3- Board of Directors
• 4- Employees

Understanding the corporate structure of a startup is imperative to business success.

Deriving a crystal clear definition for the term “Startup Corporate Structure” certainly provides a starting point for this discussion.

At its heart, ‘Startup Corporate Structure’ encompasses the chain of command, responsibilities and rights of different startup members, extending from the founder(s) all the way down to the intern.

Often, unsuspecting startups can be caught up in the breakneck speed of business operations, neglecting the need to develop an organized structure. Such omissions can stall growth, create ambiguity in roles, and even lead to internal conflict – elements detrimental to any budding enterprise.

Therefore, a meticulously designed and executed Startup Corporate Structure can be a game-changer for scalable businesses.

Startups, by their very dynamic nature, progress at a frenetic pace.

To keep up with this speed and to facilitate scalability, a flexible and adaptable corporate structure is essential.

1- Founder(s)/CEO

At the helm, we usually find the founder(s) or CEO. Their role encompasses defining the company’s vision, strategy, and culture – creating a robust bedrock for their venture. They build their team, marshal resources, and take the pivotal decisions that shape the course of the startup.

2- Management Team/ C-Suite Executives

Beneath the founder(s) are the members of the management team. This typically includes positions like the Chief Operating Officer (COO), Chief Financial Officer (CFO), Chief Marketing Officer (CMO), etc. Each has a dedicated role. For instance, the CFO manages financial risks while the CMO handles marketing strategies.

3- Board of Directors

The Board for an early-stage startup typically consists of the founder, as the company receives Venture Capital (VC) funding, the VC will insist that they receive a seat on the Board. The right Board Members will bring valuable insights, drawn from their wealth of experience, and can prove invaluable. Selecting members with diverse backgrounds can offer a broad spectrum of perspectives, capturing a holistic view of the industry.

4- Employees

Startup employees are often seen juggling multiple roles and responsibilities. As startups begin to grow and scale, however, it’s advisable to provide employees with specific job roles. This ensures accountability and efficiency within the organization.

The initial phase of a startup often mirrors a flat structure where everyone pitches in wherever needed. While this can foster a sense of ownership and inclusivity, as a startup scales, assigning specialized roles mitigates confusion and maximizes productivity.

also, Check Business Formation Servies.

When it comes to designing a Startup Corporate Structure, scalability must not be overlooked.

As a startup grows, it has to deal with an increasing number of tasks which require a higher amount of specialization.

The organizational structure must be able to incorporate these new roles and departments seamlessly without disrupting current operations, hence, a structure that encourages scalability is key.

In conclusion, a well-developed Startup Corporate Structure fosters clarity, aligns the team towards the organization’s vision, and enables efficient decision-making.

Plus, it readies the company for future growth, effectively paving the way for scalability.

So, while passion and idea generation lies at the heart of all startups, it is the systematic structural underpinning that sets a startup on the path to becoming a scalable enterprise.

 If you would like to speak with an experienced Business attorney, please reach out to 91���� for a free consultation.

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Table of Contents

• 10 Days Running of the Clock 
• Isolation guidelines:
• Ending Isolation:
• Mask guidelines:
• Table 1: Persons Who Should Isolate
• KEY TAKEAWAYS:
• Sources:

As of May 24, 2023, the California Department of Public Health chose to follow the CDC guidelines with regard to isolation guidelines. Regardless of Vaccination Status, you should isolate if you are sick and suspect that you have Covid-19.

Symptoms may appear 2-14 days after exposure to the virus. Anyone can have mild to severe symptoms.

Currently, the CDC has included to following as possible symptoms:

• Fever or chills
• Cough
• Shortness of breath or difficulty breathing
• Fatigue
• Muscle or body aches
• Headache
• Net loss of taste or smell
• Sore throat
• Congestion or runny nose
• Nausea or vomiting
• Diarrhea

10 Days Running of the Clock

If you have any of the following symptoms, you should also take a Covid test to determine if you have Covid-19.  If you test negative, you can end your isolation.  If you test positive, follow the isolation and masking recommendations below:

1. If you had no symptoms, you count 10 days from the first full day following the day you tested positive for isolation purposes.  If you develop symptoms within 10 days from when you were tested, the 10-day clock restarts on the day following the day you developed symptoms.
2. If you had symptoms, you count 10 days after the first full day after the day your symptoms started.

Isolation guidelines:

If you test positive for Covid-19, stay home for at least 5 days and isolate others within your home, as you are most likely infectious during these first 5 days.

Ending Isolation:

The decision whether to end isolation depends on how serious your Covid-19 symptoms were.  

If you had symptoms and:

1. Your symptoms are improving, you may end isolation after day 5 if you are fever free without the use of fever-reducing medication.
2. Your symptoms are not improving, continue to isolate until you are fever-free for 24 hours without the use of fever-reducing medication and your symptoms are improving.
3. If you had moderate symptoms (such as shortness of breath or difficulty breathing) you need to isolate through day 10.  
4. If you had severe illness (if you were hospitalized or have a weakened immune system) you need to isolate through day 10, consult a doctor before ending isolation, and may have to take a viral test before ending isolation.

Regardless of when you end isolation until at least day 11, you should:

• Avoid being around people who are more likely to get very sick from COVID-19.
• Remember to wear a high-quality mask when indoors around others at home and in public.
• Do not go places where you are unable to wear a mask until you are able to discontinue masking (see below).

Mask guidelines:

1. Wear a mask through day 10
2. If you have an antigen test, if you test negative two times at least 48 hours apart, you may remove your mask sooner than day 10.  

After you have ended isolation, if your COVID-19 symptoms recur or worsen, restart your isolation on day 0. Talk to a healthcare provider if you have questions about your symptoms or when to end isolation.

Table 1: Persons Who Should Isolate

*After ending isolation (no fever without the use of fever-reducing medications and symptoms are improving), confirmed cases may remove their mask sooner than Day 10 if they have two sequential negative tests at least one day apart.

If antigen test results are positive, the person may still be infectious and should continue wearing a mask and wait at least one day before taking another test.

Infected persons should notify close contacts to encourage them to get tested 3-5 days after exposure. Learn more on how to notify close contacts through the guidance on .

KEY TAKEAWAYS:

• Confirmed Covid-19 persons should isolate for at least 5 days.
• If symptoms do not improve, then continue to isolate for 10 days, or unless the person receives two consecutive negative antigen test results at least 48 hours apart.

Sources:

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EMPLOYER ALERT High Heat Warning and Heat Illness Prevention

Table of Contents

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• Provide water: 
• Allow for Rest: 
• Provide Shade: 

As a seasoned California employment law attorney I have seen firsthand what can happen if employers don’t follow the law to ensure employee safety.

As the weather varies during the summer months, heat waves can cause severe illness! The California Department of Industrial Relations Cal/OSHA enforces safety measures that protect workers.

When an excess heat watch is issued in California, Cal/OSHA reminds all employers to protect outdoor workers from heat illness. Additionally, the National Weather Service maintains a summary webpage of California hazardous weather advisories and warnings, including dangerous hot weather, that employers can review for updated information about local weather events.

The , California’s heat illness prevention standard, applies to all outdoor worksites and outdoor workers, including those in construction, landscaping, agriculture, transportation of agriculture products, and construction material or other heavy industrial and commercial products.

Additionally, workers who spend a significant amount of time working outdoors, such as groundskeepers, security guards, public works employees, or workers in non-air-conditioned vehicles, are covered under CCR §3395.

According to Cal/OSHA’s most recent news release, “Employers in California must take steps to protect outdoor workers from heat illness by training all employees in the signs of heat illness and how to prevent getting sick, as well as providing and encouraging the use of water and cool-down rest breaks in the shade.”

To prevent heat illness, the law requires employers to provide outdoor workers with fresh drinking water, access to shade when the temperature reaches 80 degrees and higher, and cool-down rest breaks in addition to regular rest breaks.

Additionally, employers must maintain a written heat-illness prevention plan containing information and training on the signs of heat illness and what to do in an emergency.

Further, in certain industries, the law requires additional measures to protect workers when the outdoor temperature reaches or exceeds 95 degrees.

Employers with outdoor workers must take the following steps to prevent heat illness:

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Develop and implement an effective written heat illness prevention plan that includes emergency response procedures.

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Train all employees and supervisors on heat illness prevention.

Provide water: 

Provide drinking water that is fresh, pure, suitably cool, and free of charge so that each worker can drink at least one quart per hour, and encourage workers to do so.

Allow for Rest: 

Encourage workers to take a cool-down rest in the shade for at least five minutes when they feel the need to do so to protect themselves from overheating. 

Provide Shade: 

Provide shade when workers request it or when temperatures exceed 80 degrees. 

To learn more about heat illness prevention and how to comply with Cal/OSHA’s regulations, contact our experienced California Employment Attorneys, contact us to schedule a free consultation.

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By, Ian Bennett-Goldberg

Over the years working as a Silicon Valley Startup Attorney I have seen far too many startups fail due to founder disputes.

For founders and early-stage employees, there is no true substitute for the benefits derived from properly drafted agreements regarding equity interests (stock purchase agreements) with appropriate measures of security in the event that the relationship simply doesn’t work out.

For such early-stage equity interest holders, having contractual terms that are both adequate and certain with respect to what happens to a founder’s stock in the event of a break-up is perhaps one of the most critical boxes to check before signing on the proverbial dotted line.

After all, let’s face it, relationships in early-stage companies (Startups) don’t always work out and unplanned exits are more common than not. 

Unfortunately, what is perhaps equally if not more common, is the reliance by the founders on agreements that are not sufficiently tailored to their particular situation and expectations and thus ill-suited to their initial goals and intentions, which is of course the very thing that contracts are supposed to establish and preserve.

Among the most frequent of terms to be overlooked in such scenarios are those that ensure that if a founder departs a startup ‘without cause’ there is some basis upon which the startup founder may preserve some of their equity when it still remains subject to the startup’s rights of repurchase or what is otherwise known as unvested.

Where a person has potentially invested countless hours of time for little or perhaps even no pay, shares of stock can be tremendous and if those interests are unexpectedly lost, not because of anything the holder did in particular, but simply because a parting of the ways occurred and a standard ‘at will’ employment clause was invoked, the fallout can be devastating.

Typically, this risk is mitigated by ‘trigger’ clauses that are meant to ensure that if an equity interest holder is let go without cause incident to a liquidation event or other such fundraising or performance milestone that might present the temptation to deprive someone of their startup shares, then some or all of their unvested equity will have its vesting accelerated and thus no longer be subject to automatic rights of repurchase for pennies on the dollar.

But what happens when a founding shareholder is forced to leave their startup company before any such clause comes into play, or what if the controlling contract itself simply does not have any such provision? 

Historically this would mean that the aggrieved founding shareholder was out of luck and, assuming that the startup company acted within the black letter of the contract, more likely than not left with nothing more than a highly questionable legal claim and a lot of ‘what-ifs’.

Now make no mistake, a loss of unvested founders shares without any rights of acceleration or other actionable protections still presents a daunting uphill battle for the departing founder. 

However, developments in California cases over the last several years, coupled with certain longstanding principles, have begun to present a path by which such interest holders may successfully seek redress when their loss of stock or other interest is the result of malintent even if realized within the confines of what the stock purchase agreement permits.

In short, if a startup founder has a reasonable belief and can ultimately prove that his or her loss of unvested founder stock, was, while technically allowed under the provision of the stock purchase agreement, in actuality the result of an underlying intent to deprive the startup founder of their stock value which would not have otherwise been lost, the courts or other triers of fact may have a route to properly restore what was taken.

The line of cases that provide the framework for this path begins with actions addressing such ‘bad faith’ denials in the context of lost bonuses. 

In DLSE v. Transpacific Transportation Company, 88 Cal.App.3d 823, 830 (1979), the Court opined that “the law does not support a forfeiture where the employees were terminated through no fault for their own after having substantially performed the services entitling them to a bonus.” (DLSE supra. at 830) Similarly, in Hill v. Kaiser, 130 Cal.App.3d 188, 191 (1982), the Court observed that “estoppel by conduct is a proper theory upon which to find entitlement to a bonus.” (Hill supra. at 191)).

Then in John Guz v. Bechtel National, Inc., 24 Cal.4th 317, FN 18 (2000) the California Supreme Court recognized that even where such lost interests including incentive-type compensation may be lost, it would be going too far to conclude that no situation could arise under which the depriving of such interests, even when contractually allowed, would not still be considered wrongful and thus subject to a viable cause of action and redress. 

There, the Court noted that:

“We do not suggest the covenant of good faith and fair dealing has no function whatever in the interpretation and enforcement of employment contracts.

As indicated above, the covenant prevents a party from acting in bad faith to frustrate the contract’s actual benefits. Thus, for example, the covenant might be violated if termination of an at-will employee was a mere pretext to cheat the worker out of another contract benefit to which the employee was clearly entitled, such as compensation already earned….” (Guz supra, FN18)

The observation of the Court in Guz was consistent with earlier decisions of DLSE and Hill, where was clearly stated that termination without cause is not a sufficient basis for avoiding benefits of employment that were substantially earned and anticipated to be fully received upon the continuance of employment.

Analogous to these cases are a certain number of more recent holdings which, when taken together, make equally clear that termination based upon improper motivation can not only give rise to an actionable claim for wrongful termination but can result in the excusal of the condition of continued employment as a requirement for the receipt benefits including bonuses and vesting of granted stock options.

(See Newberger v. Rifkind, 28 Cal. App. 3d 1070 (1972); Kelly v. Stamps.com Inc., 38 Cal. Rptr. 3d 240, 252 (2005); Moncada v. West Coast Quartz Corp., 221 Cal. App. 4th 768, 797 (2013)).

Accordingly, while the best case scenario will almost always be properly safeguarded rights under the controlling stock purchase agreement itself, disenfranchised startup founder may now at least find some path away from what was once considered a doomsday scenario if indeed it does appear that their interests were terminated substantially for the purpose of depriving them of those same equity rights.

If you have any questions about your stock purchase agreement or your rights as a startup founder feel free to reach out for a free consultation with an experienced San Francisco attorney. To set up an appointment call or email.

The post Don’t be a victim, fight for your Startup stock. appeared first on 91���� Business Law Firm.

Table of Contents

• Payment:
• Noncompete:
• Non-disparagement:
• Full Release:
• COBRA:
• Nonsolicitation:

Key terms to know before signing an Employment Severance Agreement

As a seasoned California Employment Attorney based in San Francisco, I have seen severance agreements in all shapes and forms. Before you sign any severance agreement you MUST know your rights. Here are some key points you should know as you review your termination agreement.

Payment:

In order to be enforceable, the agreement must pay the employee as a condition of signing the severance agreement.

Note, that the money paid cannot include earned vacation (Paid Time Off) PTO, the final paycheck, or other payments earned by the employee. But rather, the payment must be some consideration that the employee is not already entitled too.

Noncompete:

California does not allow the employee to sign a noncompete. California has a strict public policy that will not allow employers to issue a noncompete as part of a severance agreement or other agreement.

The State of California values competition, and also values social mobility. Meaning the State wants employees to have the ability to seek new employment without restrictions. (there are some exceptions to the prohibition of non-compete which apply to an acquisition or merger M&A of a business)

Non-disparagement:

Most companies require a non-disparagement clause in their Severance Agreements. In plain English, this means that the employee will not make false or negative statements about their former employer.

This can also go both directions, meaning the former employer will not make negative statements about the former employee.

Full Release:

The most important clause in a Severance Agreement is the full release. This clause ensures that the former employee will not be able to sue their former employer in the future for any reason, in exchange the employer MUST pay the former employee something they were not already legally obligated to pay.

The most common is a payment of cash, however, a stock grant, or other forms of payment is legally acceptable.

COBRA:

Some employers offer to pay between 3-6 of the COBRA payments. For those who don’t know COBRA allows a former employee to keep their employment health insurance when they are looking for a new job.

However, COBRA payments can be very expensive. Therefore, as a sign of good will some employers offer to pay for a few months to ensure that the former employee is covered during their job search.

Nonsolicitation:

Nonsolicitation of other employees and of company customers is not allowed under California employment law. Under some circumstances, an employer can limit your use of confidential and proprietary information to solicit your fellow employees and customers.

For example, you cannot take a list of all customers and employees from your employer.

This is not intended to be a full and complete list of terms; this is just a summary of some key areas. We offer a free consultation with an experienced employment attorney to discuss your rights. If you would like to schedule a time you can call or email us to set an appointment.

The post Severance Terms and Agreement You Need to Know, or else! appeared first on 91���� Business Law Firm.