Do Good: Becoming A Benefit Corporation In California

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Do Good: Becoming A Benefit Corporation In California

Transactional Attorneys Assisting with Benefit Corporations Throughout San Bernardino

n an effort to promote various social benefits and public goods in addition to shareholder profits, California recently passed legislation allowing corporations to apply for benefit corporation status. This status is of increasing interest to entrepreneurs and startup companies across the state, and one you may want to consider when forming your own company.

What Is Benefit Corporation Status?

Benefit Corporation Status is a type of corporation that allows a for-profit entity to pursue certain societal goods in addition to maximizing profits for investors and shareholders. For instance, a company may pursue goals of minimizing environmental impact, or of increasing civic involvement in a community.

Traditionally, corporations are tasked with growing their revenue and maximizing profits above all other agendas, which can create outcomes that are ultimately less beneficial to society. For example, if products that damage the environment are consistently less expensive than products that are good for the environment, corporations will lean toward the cheaper, but more harmful, products in order to minimize expense and maximize profit.

Benefit corporations allow companies to circumvent these types of conundrums by declaring an interest in non-profit as well as for-profit goals. This allows companies to take a more holistic approach that benefits individuals beyond their wealthy stakeholders.

What Does a Benefit Corporation Require?

Becoming a benefit corporation requires three fundamental steps that are different from normal corporate status. First, the benefit corporation must declare a public benefit purpose. Under California law, this public benefit can include any of the following:

  • Preserving the Environment

  • Promoting Arts and Sciences

  • Helping Low Income of Underserved Communities

  • Promoting Public Health

While these types of public benefits are examples, they are not an exhaustive list and California law permits any public benefit purpose that truly supports a public good.

Once this public benefit is established, officers and directors at the corporation are required to consider this public benefit during their decision-making, and evaluate how any particular decision is likely to impact the public goods that they have chosen to focus on.

The corporation must also report on the ways that its actions have helped or hurt such public benefits. This allows the public to independently evaluate whether the corporation is meeting the objectives it has set out for itself beyond simply increasing profit.

If you are just starting out as a corporation, this process allows you to achieve benefit corporation status from the get-go. If you are working with an existing corporation that is considering transitioning to benefit corporation status, it is required that two-thirds of shareholders agree with such a status change before it can be implemented.

The “Benefits” of Benefit Status

Consumers are increasingly looking to patronize companies whose missions and goals align with their own. Benefit corporation status allows corporations to clearly signal to consumers what their goals and principles are, and how they are working to support those objectives.

Benefit corporation status also gives officers and directors more flexibility in making decisions on behalf of a company, as they are not bound to consider only those outcomes that best maximize profits.

California Lawyers Advancing Corporate Welfare Through Benefit Status

Whether you are an entrepreneur just starting out or a seasoned business professional interested in broadening  the objectives of your corporation, benefit corporation status may be an important strategic change worth considering. At CKB Vienna LLP, our transactional attorneys can work with you to evaluate how benefit status can positively impact your company and your community as well. For more information, contact us online or at 909-980-1040.

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The Benefits of Alternative Dispute Resolution For Small Businesses

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The Benefits of Alternative Dispute Resolution For Small Businesses

San Bernardino Business Law Attorneys Assisting With Small Business Dispute Resolution

If you are a small business owner, you have no doubt experienced a legal dispute at one time or another. Whether through disgruntled employees, a member of the public who is injured while on your property, or a dissatisfied contractor, claims for damages can easily arise as the cost of doing business.

While these types of disputes may be difficult and frustrating, they rarely involve dollar amounts that justify paying exorbitant legal fees just to defend yourself and your business. For this reason, alternative dispute resolution has become an increasingly promising alternative for resolving small business disputes.

Options for Alternative Dispute Resolution in California

The California judicial system heavily promotes the use of ADR in state court cases. Options for ADR in California include:

  • Mediation

  • Arbitration

  • Neutral Evaluation

  • Settlement Conferences

Neutral evaluation and settlement conferences often require the least amount of commitment for litigants who are wary of dispute resolution and would prefer to litigate their case.

In a neutral evaluation, a neutral evaluator is selected who is an expert in the field at issue such as construction. Each party has the opportunity to present their case to the neutral evaluator. The evaluator will then discuss each party’s strengths or weaknesses in the case with that party, and offer suggestions for resolving the dispute. These suggestions are not binding but can help parties decide the best way to move forward.

Settlement conferences are conferences handled by a judge or attorney where the two parties attempt to reach a settlement agreement. Settlement conferences can be mandated by California courts in an effort to see if the parties can reach some sort of agreement on their own – before taking the dispute into the courtroom.

Mediation and Arbitration

Two of the more widely known forms of ADR are mediation and arbitration. Both have significant benefits to small businesses because they offer an opportunity to resolve disputes without the time and expense of litigation. Additionally, because both processes are more formalized, they are more likely to result in a final outcome.

Mediation is a more directed and facilitated process than a neutral evaluation. In a mediation, an experienced mediator works with both parties to facilitate the resolution of a dispute. Rather than try to simply identify strengths and weaknesses, a mediator works with the parties to actively guide them to a middle ground that can serve as a final outcome and settlement of a matter.

Arbitration, by contrast, is the most formal of all ADR processes. In an arbitration, the parties present their cases to a formal arbitrator, or panel of arbitrators, in a process similar to a trial. The arbitrators can hear testimony and evidence, but the rules are far more relaxed than in litigation – and the ultimate outcome of the arbitration can be kept private, which helps protect business interests and trade secrets.

Advantages of ADR For Small Businesses

The primary advantages of ADR for small businesses are that these processes help to keep costs down, minimize the time and effort put into dispute resolution, and facilitate parties in working toward a more collaborative outcome than allowed in a courtroom.

This, in turn, ensures that small businesses can focus on the work that matters most to them by moving past disputes as quickly as possible. Moreover, to the extent that litigants hope to maintain some semblance of a relationship after a dispute is over, ADR helps to minimize adversarial feelings and the personal attacks that are often the hallmark of litigation.

California Attorneys Working With You To Consider ADR Approaches

If you are a small business owner who is contemplating litigation, you may want to consider whether options such as mediation or arbitration will allow you to accomplish your goals with less time and expense. At CKB Vienna LLP, our business litigation attorneys can walk you through various ADR options and help you evaluate what might work best for you. For more information, contact us online or at 909-980-1040.

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What’s In the Water? Cannabis Cultivators and Water Resources

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What’s In the Water? Cannabis Cultivators and Water Resources

Business Law Attorneys Helping Cannabis Cultivators in San Bernardino

For the last several years, California has been under constant threat of drought and water scarcity, causing many policy changes in the state and efforts to curb water usage. With the passage of new laws in 2016 legalizing the cultivation and sale of marijuana in the state, environmentalists and water advocates have become understandably concerned about how this will impact California’s water resources.

In response to these concerns, Governor Jerry Brown enacted Senate Bill 837. This bill added important environmental protections to the Marijuana Cannabis Regulation and Safety Act (“MCRSA”), and charged the California Water Resources Control Board with enacting regulations to protect the environment and conserve water.

In October 2017, the Board issued a Cannabis Cultivation Policy that addresses water conservation and steps that cannabis cultivators must take before becoming licensed by California.

Water Resource Protections

Under the MCRSA and the Medicinal and Adult Use Cannabis Regulation and Safety Act (“MAUCRSA”), cannabis cultivators may only become licensed if the Board determines that their cultivation will not have a negative impact on water resources. This requires evaluation of three factors:

  • Whether the water diversion of the cultivator, and any associated discharge, affects instream flow needed for fish spawning, migration, and rearing

  • Whether the cultivator’s business affects springs, riparian habitats, wetlands, or aquatic habitats

  • Whether the cultivator impacts fish or wildlife habitats, or water quality

Cannabis cultivators are also required to follow all of the provisions of the California Water Code. The Board has also placed extra focus on the discharge of possible pesticides and herbicides from cannabis cultivators and requires cultivators who are seeking a license to put plans in place to address issues such as fertilizer runoff, petroleum product use, water storage and use, irrigation runoff, and disposal of any waste products created through cannabis cultivation.

Regulation of Cannabis Cultivators and Water Resources

Under the Board’s new Cannabis Cultivation Policy, the state of California has been divided into fourteen regulatory regions. Nine of those regions are prioritized for higher levels of regulation and monitoring due to their proximity to regions that support salmon populations.

Cannabis cultivators will face increasing regulation based on whether the cultivation is for personal use, indoor commercial cultivation, or outdoor commercial cultivation. Large scale cultivators wishing to acquire regular access to water will be required to go through California’s process of establishing legal water rights.

California Attorneys Advising You on Cultivation and Water Protection

California regulators take their environmental responsibilities very seriously. With the challenges of increasing population and water scarcity, regulation of cannabis cultivation requires that cultivators acknowledge the impacts that they may have on California’s resources and work to minimize them.

If you are an individual or business considering cannabis cultivation and are wondering what requirements you will need to meet under the California Water Resource Control Board’s new policy, the cannabis attorneys at CKB Vienna LLP may be available to assist you. To schedule an initial consultation,contact us online or at 909-980-1040.

 

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Understanding Indemnification Rights

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Understanding Indemnification Rights

Indemnification Attorneys Serving San Bernardino 

Usually when an individual commits a tort or violates a contract, that individual is solely responsible for his or her actions. In employment contexts, however, complicated issues of employer and employee liability arise. For example, perhaps an employee is sued for following employer policies, or for an accident that happens while on the job.

In these situations, employers are sometimes required to defend lawsuits on behalf of employees and even pay their costs for attorney fees. This is known as indemnification.

Indemnification in California

Under California law, employers must indemnify their employees, and defend them in court, if the lawsuit against the employee is brought for actions that occurred in the scope of the employee’s employment. Under the California Labor Code, this means that employers must pay for an employee’s lawsuit expenses where the lawsuit was a result of the employee doing his job or following the orders of his superiors.

California’s laws are particularly strong in protecting the rights of employees to indemnification. Indemnity cannot be waived by contract and an employer who attempts to deny an employee the right to indemnity can face a lawsuit for interfering with the employee’s economic rights.

What Constitutes The Scope of Employment?

California employees are only entitled to indemnification when they are acting within the scope of their employment. While the scope of employment can be broad, it does not mean any action that occurs during a work day. For instance, if an employee has a car accident while off on a lunch date with a friend, that will not require indemnification.

Scope of employment is generally defined as any actions taken as a part of an employee discharging his or her duties as required by the employer, or any additional action taken specifically at the behest of the employer. Thus, if an employee doesn’t typically deliver goods to customers but is asked to do so by an employer, this would still fall within the scope of employment.

It is important to note that indemnification does not apply to independent contractors. It is a right that is only available to employees in California, even though independent contractors may work on behalf of an employee. This can have significant ramifications for independent contractors who are sued while doing work on behalf of another.

But What About Unlawful Conduct?

One exception to the rule of employer indemnification arises when employees engage in conduct that is unlawful and they know it is unlawful. In these circumstances, an employer is not required to defend its employee or pay legal bills.

The most important aspect of this exception is determining whether the employee knew his or her conduct was unlawful. If an employer asks an employee to deposit checks at a bank for purposes of money laundering, but the employee does not know that he or she is engaging in money laundering, this is not an exception to indemnification.

By contrast, if an employee is dealing drugs at work and is arrested for doing so, he or she obviously knows that the conduct is unlawful and the employer is not obligated to indemnify.

California Labor Attorneys Helping You Determine Your Indemnification Rights

If you are an employee who has recently been sued on the basis of actions that occurred during your time at work, and were done at the direction of your employer, you may be entitled to indemnification. Likewise, if you are an employer whose employees are facing a lawsuit, determining your indemnification obligations is of the utmost importance.

At CKB Vienna LLP, our employment law attorneys can help you evaluate whether the lawsuits arise from the scope of employment and, if so, if any special exceptions apply. For more information, contact us online or at 909-980-1040.

 

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Eminent Domain: How To Protect Your Property

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Eminent Domain: How To Protect Your Property

Eminent Domain Lawyers Serving all of San Bernardino

Occasionally in California and other states across the country, officials undertake large scale construction and public works projects that require the acquisition of private land. For instance, a road may need to be widened or public utilities placed underground.

In these circumstances, states can obtain the private land that they need through the process of eminent domain – which is the power of government to take private land for a public purpose as long as just compensation is provided. In California, eminent domain happens on occasion and all property owners should be aware of their rights during this process.

Instituting an Eminent Domain Action

Under California law, before property can be obtained through eminent domain, the governmental agency seeking to obtain the property must first adopt a public resolution of necessity indicating that it needs the land for some public purpose. This resolution of necessity must be passed at a public hearing and can only be adopted if the government can show:

  • The project for which the government seeks the land is a necessary project

  • The property at issue is necessary for the project

  • The project location offers the most public benefit with the least private impact

  • An offer to purchase the property has been made

As part of the above four steps, the governmental agency is required to conduct an appraisal of the property that it would like to obtain, and make an offer to the property owner consistent with that appraisal. An agency may not offer the property owner substantially less than the property is worth. If the property owner refuses, the agency may institute an eminent domain action in court.

Obtaining Property Through Court Action

Assuming the governmental agency has obtained the necessary resolution of necessity, a court proceeding over eminent domain is rarely about the acquisition of the land itself. Governmental agencies have the power to obtain the land that they need from private individuals as long as they pay just compensation for such land. Thus, most litigation centers on what is just compensation.

In litigation, a private landowner may argue that the government has refused to pay the actual value of the property sought, or is trying to undercut the owner. In court, a judge will typically retain independent appraisers to consider the property at issue and make a determination of the fair market value of the property.

Fair market value is defined as the highest market value that a seller would be willing to sell at when under no particular urgency to sell, and which a buyer would be willing to pay when under no particular urgency to purchase. Based on the fair market value determined by the appraisers, the court will try to reach a settlement between the government and the private landowner.

If a settlement cannot be achieved, a jury will be tasked with determining the amount of compensation that the property owner is entitled to. The government will then be required to pay the jury’s final judgment amount within thirty days of the judgment being rendered. After the judgment is paid, transfer of title in the property can be given to the governmental agency.

California Attorneys Ensuring Just Compensation For Your Property

While California private property owners do not always have the right or ability to avoid an eminent domain acquisition of their property, they can request that full and just compensation be paid. If you feel that the government is trying to buy you out for less than your property is worth, the real estate attorneys at CKB Vienna LLP may be available to help. For more information, contact us online or at 909-980-1040.

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Get In Line: Obtaining A Temporary Cannabis Business License

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Get In Line: Obtaining A Temporary Cannabis Business License

San Bernardino Business Attorneys Assisting Businesses Obtain a Cannabis License

In November 2016, California’s marijuana laws underwent a drastic change through the adoption of Proposition 64, also known as Adult Use of Marijuana Act. Under the Act, California legalized the use of marijuana, allowing individuals over 21 to possess up to an ounce of marijuana and use it in their own home.  

In conjunction, California made a decision to work towards a system of institutions and regulations that would allow for the sale and use of marijuana in a safe and effective manner. In June 2017, California passed a new bill to create the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which created a single regulatory system to govern the cannabis industry in California.

What’s For Sale?

While California’s new laws immediately allowed for individuals to legally consume marijuana, they did not automatically create structures for the legal sale of marijuana. Instead, the law provided that the regulation and enforcement structures necessary for the sale of marijuana would be set up over time, with the official issuance of licenses to begin in January 2018.

As part of that structure, the Bureau of Cannabis Control was set up to develop regulations for adult-use of cannabis in California – and to license and regulate retailers and distributors of cannabis.

On September 22, 2017, the Bureau of Cannabis Control announced that it would begin issuing temporary 120-day licenses for the sale of cannabis in advance of the January 2018 date.

Getting a Temporary License

Under the Bureau’s new program, businesses can apply for one of four types of cannabis business licenses: (1) distributor; (2) retailer; (3) microbusiness; or (4) testing laboratory. Businesses must also indicate whether they want an adult-use license or a medicinal license.

The first step to obtaining a temporary license from the Bureau is to get a local permit or authorization from the local jurisdiction where the business resides. The requirements for these types of local permits are being set up by individual jurisdictions, so businesses will need to consult with local government officials to determine the requirements for authorization.

Because many local jurisdictions are still in the process of adopting their own cannabis regulations, the Bureau has indicated that it will be flexible in considering varying forms of local authorization. They may even be willing to consider letters from local authorities indicating their approval of the proposed business until more formal measures can be adopted.

Additional Business Documentation

After a local authorization is obtained, the business must submit the authorization to the Bureau along with:

  • The name of the business

  • The owners of the business

  • Contact information for the business

  • Authorization for the use of land for cannabis purposes (such as a deed showing ownership of land or letter from a landlord)

  • A premise map detailing the proposed business layout

The Bureau anticipates that approval for the temporary licenses will happen by email and that successful applicants will be able to print their temporary licenses from home. After received, the licenses will be good for a period of 120 days and then renewable for an additional 90 days after that.

California Attorneys Assisting You in Applying for a Temporary License

If you are a business owner considering applying for a temporary cannabis license, or an entrepreneur interested in getting into the cannabis industry – it can help to have a law firm navigating local and state authorizations on your behalf. At CKB Vienna LLP, our cannabis attorneys will work with you to anticipate the Bureau’s temporary licensing and get your application to the front of the line. For more information, contact us online or at 909-980-1040.

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Buying an Existing Business in CA? Make Sure to Consider Your Exposure to Successor Liability

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Buying an Existing Business in CA? Make Sure to Consider Your Exposure to Successor Liability

If you are contemplating buying a business in California, either by purchasing an existing business or by purchasing the assets of a business, there are many factors you must consider and evaluate before you make the deal. One of these many important considerations includes the potential exposure to liability that your business, as a successor, will face.

As is the case with many of California’s corporate laws, its laws regarding successor liability are much broader than similar laws in other states. Because this area of corporate law is complex and imposes many obligations on both sellers and buyers, it is very important to consult with an experienced corporate attorney who specializes in the purchase and sale of businesses, asset sales, mergers, and acquisitions.

At CKB Vienna LLP, our labor and employment attorneys routinely help many of our clients acquire other businesses (through a variety of mechanisms). We understand the potential risks associated with successor liability. Therefore, we take many steps to mitigate our clients’ exposure to such risks before the purchase and sale of a business takes place.  

What is Successor Liability?

Successor liability refers to any liability imposed upon a successor business resulting from the debts and liabilities of the predecessor. In other words, the purchaser (referred to as a successor) may be held liable for the debts of the seller (referred to as a predecessor).

Mechanisms to Avoid Successor Liability

There are a few possible options available to business owners who wish to purchase an existing business without incurring successor liability:
 

  • The purchaser may create a separate subsidiary to purchase the business.
     

  • The purchaser may contractually shift liability to the seller by including very specific legal provisions in the purchase agreement.
     

  • The purchaser may purchase only the assets of the seller rather than the entire business. (However, this does not always prevent successor liability).

Successor Liability to the Government

Government debts (i.e., TAXES) are a major exception to the general rule that purchasers do not automatically assume the debts of the seller in an asset purchase. The purchaser (including shareholders) can find itself liable for full payment of the predecessor’s outstanding tax obligations.  Therefore, it is important for the purchaser to take preventive measures to avoid being on the hook for the predecessor’s tax bills and any other government debts.
 

  • To this end, one option for a purchaser is to request a reduction in purchase price by the amount owed by the predecessor to the government. In other words, the purchaser seeks reimbursement for paying the predecessor’s government debts, which can include:

    • Owed contributions to the California unemployment compensation disability fund, employment training fund, and the unemployment fund, plus the amount of any penalties and interest
       

    • Income and franchise taxes, plus the amount of any penalties and interest
       

    • California sales and use taxes

 

  • In many cases, the purchaser’s decision to purchase a business may be contingent upon whether there is any successor liability for government debts, and/or the amount of  any and all outstanding debt obligations.
     

  • Regardless of how a purchaser feels about outstanding tax liabilities that may exist,  the purchaser must conduct due diligence and should request confirmations from all relevant government entities that the business has satisfied all debt obligations. If government debts do exist, the purchaser needs to know the accurate and up-to-date value of all outstanding debts.

Experienced Employment Law Attorneys in Southern California

At CKB Vienna LLP, our corporate attorneys specialize in helping business owners identify the risks associated with purchasing a target business, and successor liability. More importantly,we work with businesses to craft and implement various strategies to mitigate these risks.

To learn more, contact us today by calling 909-980-1040 or filling out our short online form. We have locations in Rancho Cucamonga, San Bernardino, and Los Angeles – for your convenience.

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What California Employers Need to Know about At-Will Employment

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What California Employers Need to Know about At-Will Employment

The State of California provides many substantial protections for workers pursuant to its labor and employment laws, including a minimum wage and paid overtime that are both more generous than mandated by federal law.

What is At-Will Employment?

The California Labor Code is made up of many “employee-friendly” laws designed to promote and protect the important employee interests. However, the Code also contains some state laws that provide employers with important protections. One example is the state’s law regarding at-will employment. Specifically, the California Labor Code provides that:

“An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month.”

In other words, the law presumes that an employment relationship between a California employer and employee is, by default, an at-will employment relationship. This enables either party to terminate the employment – at any time for any reason – or for no reason at all.

Terminating an At-Will Employee

From an employee’s perspective, at-will employment provides an easy, no-strings-attached way to quit a job. However, it also means that an employer can terminate an employee just as easily. It is easy to see how the at-will employment law does not provide employees with the level of protections found in California’s other labor laws.

Employer Benefits

The at-will employment structure clearly favors employer interests::
 

  • It provides employers with the freedom to terminate an at-will employee without cause (i.e., for no reason)
     

    • This is a very important for employers because “cause” has a specific meaning in the context of California employment law. It is defined as “a fair and honest cause or reason, regulated by good faith on the part of the employer.”
       

    • Because employers do not have to prove cause when terminating at-will employees, they are relieved of a significant legal burden.

    • More specifically, at-will employment means that a terminated employee cannot sue an employer for breach of implied contract based on cause.

 

  • It is important to note that while employers can terminate at-will employees for any reason or for no reason, employers must still comply with all federal, state, and local laws prohibiting discrimination and retaliation.
     

    • Employers must also comply with labor laws by paying employees for earned overtime, unused vacation, etc.

Exceptions to At-Will Employment

As mentioned, California presumes that an employment relationship is at-will. However, there are many exceptions that can overcome this presumptions, including the following:

 

  • Employees who have written employment contracts that require good cause and/or specific procedures for termination
     

  • Employees hired for a specific term of employment, such as a specific number of years
     

  • Employees covered by collective bargaining agreements that require just cause and due process prior to termination  
     

  • Public-sector employees protected by various civil service laws and/or union-agency agreements that cover termination
     

  • Employees whose employers - through their words and/or actions - overcome the presumption of at-will employment
     

    • One example would be an employer-established process and protocol that must be followed prior to termination  
       

    • Another example is an employer’s assurances that an employee has long-term employment status

Preserving At-Will Employment

Certain steps that employers can take to ensure they preserve at-will employment (and the benefits associated therewith) include the following:

  • Include an at-will employment notice on all employment applications and job offers

  • Require employees to sign an acknowledgement of at-will employment prior to starting work

  • Train managers to refrain from making any statements to job applicants and employees that could be construed as an “assurance of long-term employment” or a guarantee of work

  • Include an at-will employment notice in employee handbooks

 

Our firm offers risk mitigation advice to employers wishing to avoid litigation. We also provide representation to employees being asked to sign employment contracts affecting their at-will status.

Experienced Employment Law Attorneys in Southern California

At CKB Vienna LLP, our labor and employment attorneys specialize in helping employers craft and implement various strategies to create and preserve at-will employment. We also represent employers in matters where at at-will employment relationship is challenged by employees.  

To learn more, contact us today by calling 909-980-1040 or filling out our short online form. We have locations in Rancho Cucamonga, San Bernardino, and Los Angeles – for your convenience.

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Things To Remember Before You Hire Your First Employee (and Every Employee After That!)

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Things To Remember Before You Hire Your First Employee (and Every Employee After That!)

Hiring your first employee can be exciting and daunting at the same time. The fact that need to hire an employee means that your business is growing - which is great. It also means that you become someone’s boss, a role that comes with many responsibilities and duties. Your new legal status an employer subjects you to many rules and regulations (state and federal) that you did not have to worry about when you were a one-man show.

As with any business decision, there are financial and legal risks associated with becoming an employer. However, you can drastically minimize your exposure to potential risks by following the rules - always. To that end, you first need to know the rules. Then you need to know how to best follow these rules so that you do not fall into any traps. With this in mind, one can see how important it is to consult with an experienced employment attorney before you interview potential candidates – and certainly before you hire someone.

Factors to Consider Before Forming your First Employer-Employee Relationship

There are many factors you should consider before you hire your first employee - from both a business and legal standpoint. Once you make the decision to go for it, your legal responsibilities as an employer kick in right away and you need to be ready!

To that end, we have compiled a brief sampling of a few important things you should remember before you say, “You’re Hired!”

  • Confirm Employment Eligibility
     

    • ***Note: When completing Form I-9, the employee attests, under the penalty of perjury, that he or she is eligible to work in the U.S.; and the employer (or authorized representative for the employer) attests, under the penalty of perjury, that he or she physically examined the appropriate documents.

  • Find and Purchase the Necessary Insurance Coverage
     

    • Except in a very limited number of circumstances, the State of California requires employers to maintain adequate workers’ compensation insurance coverage and unemployment insurance coverage.
       

    • An employer may face severe administrative penalties if it does not have these insurance coverages in place, or if the insurance policies are insufficient.  If an employee becomes entitled to workers’ comp or unemployment benefits - and the employer does not have insurance coverage to pay these benefits - the employer must pay for all expenses out of their own pocket. This is not a good situation for any employer.

  • Collect & Remit Taxes to the IRS & The State of California

    • Payroll taxes, such as federal income tax, Medicare, Social Security, California income tax, etc., do not magically withdraw themselves from an employee’s earnings. Instead, an employer must calculate the correct amount to withhold before issuing payment to the employee.
       

    • Employers must then deposit the withholdings as directed by the IRS and the State of California and file the associated tax returns.
       

    • Don’t forget to calculate and deposit the amount of payroll tax that you, as an employer, must pay to the various tax agencies.

The list of responsibilities you undertake when hiring your first employee can certainly seem intimidating. Yet, with a good employment attorney by your side, you can take this next step in your career with confidence.

Experienced Employment Law Attorneys in Southern California

At CKB Vienna LLP, our labor and employment attorneys specialize in helping soon-to-be-employers navigate the legal maze of state and federal rules and regulations that apply in specific situations. We work with employers to substantially minimize their exposure to liability by creating and implementing legally-compliant strategies and policies.

We know that hiring your first employee is a professional milestone for you and your business. We want you to be in the best position to follow the law while you focus on running your business.  


To learn more, contact us today by calling 909-980-1040 or filling out our short online form. We have locations in Rancho Cucamonga, San Bernardino, and Los Angeles – for your convenience.

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Refresher Course: A Few Important Wage and Hour Rules That Employers Need to Remember

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Refresher Course: A Few Important Wage and Hour Rules That Employers Need to Remember

Successful California business owners readily admit that ensuring compliance with all applicable laws, rules, and regulations is much more than just good business practice. Rather, it is an essential component of business operations. So much so, that a business can succeed or fail based solely on its level of commitment to regulatory compliance.

A Quick Refresher for Employers

California businesses with employees must adhere to all of the “regular” regulations PLUS the state’s complex and vitally-important wage and hour rules. Businesses subject to this intricate regulatory framework need to know:

  • what rules apply,

  • what the rules mean,

  • what the rules require (and/or prohibit), and

  • what penalties are possible in instances of noncompliance.

The stakes are very high. The rules and regulations are difficult to navigate. This combination makes it vitally important that employers seek legal counsel as early in the process as possible. Work with an experienced and reputable employment lawyer who stays current on developments in the law, and who understands your goals as a business owner and employer.

Some of the important issues that an employment lawyer can help you handle include the laws and regulations governing:

  • How and when employees must be paid

  • Specific benefits and break times that employees are entitled to receive

  • The sorts of conduct and behavior that employers must never engage in with employees, or perform around employees

  • And so much more

We have compiled a few of California’s important wage and hour laws that you, as an employer, should know (and not forget!)

  • Minimum Wage Rules:
     

    • Employers With 26 or More Employees:

      • Beginning January 1, 2017, California increased the minimum hourly wage for employers with 26+ employees to $10.50. This amount will increase by an increment of $0.50 every January until the minimum wage reaches $15.00 in January 2022.
         

    • Employers with 25 or Less Employees:

      • The annual increase in the minimum wage for this group of employers will not begin until January 1, 2018. The current minimum wage of $10.00 will increase by an increment of $0.50 annually until a minimum wage of $15.00 is reached.

    • ******Note: Some cities in California (such as Los Angeles and San Diego to name a couple) have established a minimum wage that is higher than state-ordered minimum wage. Make sure you know if your city has such an ordinance.

  • Workers Doing the Same Job: PAY THEM THE SAME!

    • California’s Equal Pay Act established regulations prohibiting employers from paying lesser wages to a particular employee who performs the same job as another employee based solely on gender.

    • In 2015, the state legislature enacted The California Fair Pay Act, which expanded the scope of the Equal Pay Act by mandating employers to pay an equal amount of wages to those employees who perform substantially similar work (rather than just the “same” work).

  • Overtime Rules
     

    • California’s rules on overtime apply to all non-exempt employees over the age 18 (and in some circumstances, 16- and 17-year olds).

    • California’s approach on overtime compensation is distinct from those of other states as well as the federal government because California has enacted a daily overtime rule as well as a weekly overtime rule.

      • All employees (non-exempt that is) are entitled to overtime pay if they work more than 40 hours in a week OR if they work more than eight hours per day.

      • California’s established rate of overtime pay is 1 ½ times the rate of regular pay.

Experienced Employment Law Attorneys in Southern California

At CKB Vienna LLP, our labor and employment attorneys specialize in helping employers become compliant - and remain in compliant - with applicable laws such as the Golden State’s all-important and ever-so-complex wage and hour laws. Our goal is to get your business to where it needs to be in order to avoid penalties, fines, or any other problems. Our proactive approach focuses on preventing problems before they arise.

However, despite best efforts, you may find yourself faced with claims of noncompliance by the government or subject to a lawsuit by an employee. We have the experience and track record to help. To learn more, contact us today by calling 909-980-1040 or filling out our short online form. We have locations in Rancho Cucamonga, San Bernardino, and Los Angeles.

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Senate Aims to Protect the Youth of California By Banning the Use of Branded Merchandise in Cannabis Advertising

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Senate Aims to Protect the Youth of California By Banning the Use of Branded Merchandise in Cannabis Advertising

It does not appear that advertising restrictions faced by cannabis businesses along the West Coast and elsewhere will lighten up any time soon. Recently, both Washington and Oregon passed legislation prohibiting businesses from advertising cannabis through the use of mascots and roadside mannequins, respectively. Moreover, California is well on its way to passing the most restrictive advertising legislation yet.

Life Cycle of SB 162

  • In early 2017, California Senator Ben Allen introduced SB 162, a bill directly addressing the marketing of cannabis.

  • In June, the Senate unanimously passed SB 162.

  • Thereafter, the bill underwent the amendment process.

  • On September 1st, the Committee on Appropriations held a hearing on SB 162.

  • Currently, the status of SB 162 remains “in committee process.”

SB 162: What it is and Why it’s “Necessary”

The advertising restrictions set forth in SB 162 prohibit California businesses and individuals from “all advertising of cannabis or cannabis products through the use of branded merchandise, including, but not limited to, clothing, hats, or other merchandise with the name or logo of the product.”

California lawmakers cite a number of reasons that explain the rationale for creating and supporting SB 162, including the following:

  • The RAND Drug Policy Research Center determined “that a comprehensive ban on advertising through branded merchandise by persons and companies licensed to sell cannabis can be a justified public health approach.”

  • The American Academy of Pediatrics issued a recommendation that the government should impose a “comprehensive ban on advertising through branded merchandise by persons and companies licensed to sell cannabis.”

  • Evidence suggests a direct link between tobacco companies’ now-prohibited use of branded merchandise and teenagers’ increased use of tobacco and alcohol. It therefore follows that California must similarly ban cannabis businesses from advertising through the use of branded merchandise.

  • In 2010, a federal court concluded that a ban on the use of branded merchandise by tobacco companies was legal because the government has a “substantial interest in reducing youth tobacco use. The court also agreed with the government’s finding that even when branded merchandise is provided solely to adults, “there is no way to limit the distribution of these items to adults only.”

    • The California legislature believes that if legally challenged, the court will conduct a comparable legal analysis and make similar findings regarding the use of branded merchandise by cannabis companies - ultimately confirming  SB 162 is necessary and enforceable

Opposition to SB162

Despite the Senate’s eloquently-described rationale behind SB 162, the California Cannabis Industry Association argues that the bill creates a fear-based, unnecessary, and misguided ban on branded merchandise that:

  • Will not result in a decrease in underage marijuana use as implied by the Senate.

  • Will result in significant damages to small cannabis businesses.

Practical Effects of SB 162 on California Cannabis Businesses

Assuming SB 162 maintains its current trajectory towards the top, it will not be long before state law officially prohibits California businesses and individuals from “all advertising of cannabis or cannabis products through the use of branded merchandise . . .”

As a result, the extensive ban on branded merchandise will create the biggest problems for the state’s small and medium-sized cannabis businesses. Why? Because these players heavily rely upon the use of branded-merchandise marketing to hopefully establish a unique (and memorable) identity that just might stand out in a rapidly-growing and crowded marketplace.

Questions About SB 162 and Its Impact On Your Business? Speak to a Knowledgeable California Cannabis Law Attorney Today

California’s young but rapidly-growing cannabis industry is subject to a continually changing legal landscape. The biggest example of this is the recent repeal of Proposition 64, quickly followed by the newly-enacted MAUCRSA. In other words, California’s cannabis businesses are subject to rules and regulations that may or may not apply on any given day.

At CKB Vienna LLP, we have significant experience creating effective legal strategies to help our cannabis business clients prepare for known, upcoming changes to relevant laws and regulations. We also have extensive experience helping clients manage and resolve urgent matters caused by unexpected, sudden, and/or forgotten changes in one or more important and applicable laws.

With the passage of SB162 looming, it is important for cannabis business owners to plan accordingly. It may become necessary to implement changes to business plans, marketing campaigns, advertising strategies, and other business decisions. Let us help you proactively approach the possible scenarios you may face in light of the proposed bill.

Talk to the experienced attorneys at CKB Vienna LLP today. Call one of our three offices to schedule a consultation, or contact us using this short online form.

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The California Cannabis Industry: Not Immune to Claims of Product Liability

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The California Cannabis Industry: Not Immune to Claims of Product Liability

California business owners that are in any way involved with putting goods and products in the hands of consumers - know all too well that products liability lawsuits are costly, time consuming, and extremely bad for business. The fallout can ruin a company’s reputation in a matter of days; and many companies never rebound from the damage.

A Costly Misunderstanding

Some cannabis business owners are operating are under a faulty assumption. Since cannabis products for medicinal and recreational uses remain federally illegal, they believe that they are free from FDA oversight and thus immune to product liability lawsuits. This is a misconception that could prove very costly.

It is true that, currently, the FDA’s role in marijuana regulation is limited to clinical and scientific research. Moreover, the FDA specifically states that the agency “has not approved any product containing or derived from botanical marijuana for any indication. This means that the FDA has not found any such product to be safe or effective for the treatment of any disease or condition.”

However, cannabis operators are still subject to product liability lawsuits based on state claims of dangerous, defective, and/or mislabeled products - California included. Therefore, it is prudent for businesses (including retailers, suppliers, distributors, and manufacturers) to recognize and remain mindful that their exposure to these legal claims not only exists, but may become prevalent in this very young industry.

What Can California Cannabis Business Owners Do To Minimize Exposure to Product Liability Lawsuits?

As cannabis operators become subject to the plethora of regulations imposed under California’s newly-enacted MAUCRSA, one important and highly-advisable plan of action that affected businesses can undertake is to establish sufficient product recall plans now, rather than later.  

Important Components to a Successful Product Recall Plan

At CKB Vienna LLP, we help businesses develop and craft comprehensive product recall plans that our clients can readily set into motion if ever necessary. You should contact our firm before drafting a product recall plan and even moreso if you are ever faced with a potential claim.

Some very general and basic components that your business should incomporate into any product recall plan include the following:

  • The creation of a general, overarching strategy

  • The creation of consistent definitions and classifications of various types of recalls (including scopes and depths)

  • The formation of a committee - led by a responsible and experienced member of the business - responsible for comprehensively and consistently examining and investigating product complaints. This same committee can then trigger the recall plan if necessary

  • The creation of an accurate and current distribution list - containing consumer, supplier, and vendor names, contact information, and dates of purchase - that can be accessed easily and quickly

    • This list is useless and potentially harmful if outdated and/or incomplete

  • Creation of a list of options for isolating potentially-unsafe products

  • FIRM INSTRUCTIONS TO CONTACT YOUR LEGAL COUNSEL BEFORE ISSUING ANY STATEMENTS OR RESPONDING TO ANY COMMUNICATIONS REGARDING CLAIMS!!!!!

  • Recording and documenting everything that you read, hear, see, do, and say from the moment anyone in the business becomes aware of a potential claim

CKB Vienna LLP—Experienced Commercial Law Attorneys and Advisors That Can Help Your Cannabis Business Minimize Your Exposure to Product Liability Claims

Numbers of California cannabis operators are beginning to experience the benefits associated with the growing industry of recreational marijuana. However, as with all business ownership and operation, there are inherent risks when manufacturing, distributing, supplying, selling, and otherwise making products available to public consumers. Therefore, prudent and proactive business owners turn to experienced commercial attorneys to minimize these risks.

For years, CKB Vienna LLP has helped businesses develop product recall plans and protocols. We also have significant experience working with and helping our cannabis-business clients with a number of legal matters specific to the unique cannabis industry. A thorough understanding of the applicable rules and regulations is essential in this continually-changing area of law; and we pride ourselves in staying abreast of all trends and developments.  Let us help you plan for the future. Contact us today.

We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone—909.980.1040—or complete our online form.

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California Approves VW’s Plan to Expand Clean Vehicle Infrastructure Around the Golden State

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California Approves VW’s Plan to Expand Clean Vehicle Infrastructure Around the Golden State

It is hard to believe that it has been two years since the infamous Volkswagen emissions scandal quickly spread across news media outlets across the world.

Specifically, in Septmber 2015, the U.S. E.P.A. issued a Notice of Violation to VW alleging that the European car company manufactured and installed a type of technology known as “defeat devices” on the company’s diesel models. As the name suggests, the defeat devices were  designed to defeat emissions tests by displaying better, cleaner results than actually scored.

Additionally, VW sold thousands of diesel-model cars to American consumers - advertised as “Clean Diesel,” but which were, in fact, anything but clean.

Fast forward to Summer 2017:

Late last month, and by unanimous vote, the California Air Resources Board (the “Board”) gave the greenlight to VW to spend 30 months and $200 million (the 1st distribution of an $800 million settlement) throughout the State. The $800 million deal with California is just one part of a greater $2 billion settlement that VW reached with federal authorities.

Infrastructure & Repairs

Infrastructure

As part of the deal,

  • VW agreed to a build clean and green, zero-emission vehicle infrastructure throughout California.
     

    • This includes installing $45 million worth of greater than 350 electric charging stations across the state, including in the following cities:

      • Fresno

      • Los Angeles

      • Sacramento

      • San Diego

      • San Jose

      • San Francisco.

    • VW must also continue to work to expand ridesharing.
       

    • VW hopes to spend $75 million on a highway-charging network of more than 50 stations

  • Moreover, Electrify America, the Division of VW handling this matter, stated to the Press that VW hopes to spend “35% of investment funds” in disadvantaged areas of California, including charging stations, access to ultra-clean vehicles, and public outreach.

Repairs

Since California approved the deal between VW and the State, VW can only just now notify consumers that VW representatives are available at dealerships to correctly modify the emissions controls.

  • VW will offer owners of the specific models at issue the option to keep their vehicle– with the repairs fully made – or to have it bought back.

  • The modifications approved by California include hardware as well as software changes.
     

  • During the modification process, the company will uninstall the defeat device program. They will then install the correct software program that properly regulates the emission controls.
     

  • VW will also replace hardware components that relate to certain other emission control system hardware.

Questions Regarding Volkswagen’s Plans Throughout the State? Contact Us Today!

For years now, CKB VIENNA LLP has represented all sorts of businesses and individuals regarding green business practices, and regulatory actions that directly impact our clients’ lives and livelihood.  Our team understands the complexity of the issues and stands ready to represent you aggressively. We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone – 909.980.1040 – or complete our online form.

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New Employer Notice Requirements in California: Employee’s Domestic-Violence Related Rights

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New Employer Notice Requirements in California: Employee’s Domestic-Violence Related Rights

Last September, California Governor Jerry Brown signed into law AB 2337, an employment related law that amended the State’s Labor Code.

Specifically, in enacting AB 2337, the California legislature recognized that many employees were woefully unaware of the domestic-violence related protections and rights currently afforded to them pursuant to Section 230 of the Labor Code.

What Are Some Domestic-Violence Related Employee Rights Provided by Section 230 of California’s Labor Code?

As one example, Section 230.1(a) of the Labor Code provides that:

. . .[A]n employer with 25 or more employees shall not discharge, or in any manner discriminate or retaliate against, an employee who is a victim of domestic violence, sexual assault, or stalking for taking time off from work for any of the following purposes:

(1) To seek medical attention for injuries caused by domestic violence, sexual assault, or stalking.

(2) To obtain services from a domestic violence shelter, program, or rape crisis center as a result of domestic violence, sexual assault, or stalking.

(3) To obtain psychological counseling related to an experience of domestic violence, sexual assault, or stalking.

(4) To participate in safety planning and take other actions to increase safety from future domestic violence, sexual assault, or stalking, including temporary or permanent relocation.

Another example is found in Section 230.1(c), which provides that:

An employee who is discharged, threatened with discharge, demoted, suspended, or in any other manner discriminated or retaliated against in the terms and conditions of employment by his or her employer because the employee has taken time off for a purpose set forth in subdivision (a) is entitled to reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer, as well as appropriate equitable relief. An employer who willfully refuses to rehire, promote, or otherwise restore an employee or former employee who has been determined to be eligible for rehiring or promotion by a grievance procedure or hearing authorized by law is guilty of a misdemeanor.

The Notice Requirements of AB 2337: Informing Employees of Their Domestic-Violence Related Rights

In order to increase overall awareness of these employee rights and protections regarding domestic violence, AB 2337 amended Section 230.1 of the Labor Code to require that employers must inform each and every employee of these rights, in writing, upon hire and at any time upon request.

Additionally, AB 2337 directed that by July 1, 2017, the Labor Commissioner must develop and post a form that employers may use to comply and satisfy the relevant notice/disclosure requirements. Pursuant to the law, an employer’s mandate to comply with the notice requirements became effective only when the Labor Commissioner posted the new form.

The New Form

As ordered, the Labor Commissioner (i.e., the CA Division of Labor Standards Enforcement) published the form, “RIGHTS OF VICTIMS OF DOMESTIC VIOLENCE, SEXUAL ASSAULT AND STALKING”, in both English and Spanish.  These forms and others can also be found at the DLSE web page.

The law does not require a California employer to use the exact form published by the Labor Commissioner, but the form must be “substantially similar in content and clarity.”

Contact A California Employment Law Attorney Today

It is important for California employers to update their hiring procedures so as to include the new notice. If you have any questions regarding employer notice requirements, or any other labor employment matter, we are here to help.

Whether you are facing possible litigation, or whether you would like to make certain your business is compliant with current law, please contact us today to schedule a consultation with an experienced, knowledgeable California employment law attorney today.

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The Importance of Requesting a Home Inspection Before Signing On the Dotted Line

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The Importance of Requesting a Home Inspection Before Signing On the Dotted Line

Buying a house is very often the most important and expensive purchase in someone’s life. As such, it is crucial for a buyer to approach the sale process armed with as much information about the house as possible.

Only when a buyer is fully satisfied that all material information about the house has been identified, located, and made available, can the buyer make a truly informed decision about how to proceed.

The Home Inspection: It May Be a Deal Breaker

The Home Inspection (and any generated reports) is one of the primary sources of information relied upon by the buyer (and the lender who plans on financing the buyer’s mortgage).

Depending on the results of the Inspection, the buyer has a few options regarding how to move forward:

  • Proceed with the sale without making any adjustments to the sales price
     

  • Proceed with the sale, but with an adjusted sales price
     

    • For example, a buyer made an offer on a house based on the assumption that the house’s electrical system was up-to-code. The Home Inspection, however, revealed that the electrical system was actually not up-to-code. Research reveals that it will cost $10,000 to repair.
       

    • The buyer may still want to purchase the house, but for a reduced sales price that takes into account the $10,000 expense the buyer will now have to absorb in order to repair the electrical system
       

  • Rescind the offer altogether

Home Inspections: Worth the Expense

There are many benefits to Home Inspections, and these inspections have benefits that far outweigh the minimal cost of paying for the Inspection.

  • Buying a Home

    • Save Money Later By Identifying Problems Today

      • Identifying any problems with the property before the sale closes allows the buyer to request from the seller some or all remedial or replacement costs.

      • Moreover, an inspection may identify a problem that will be much less expensive to repair if fixed now, rather than after the problem erupts into a full-blown disaster.
         

  • Selling a Home
     

    • Commissioning an inspection of the home before listing it for sale provides valuable information for how best to list the house. An inspection will identify problem areas to the seller, who can then remedy the issues, reduce the selling price, or partake of other options to compensate for the flaw.

 

CKB VIENNA LLP: Experienced Real Estate Attorneys Who Can Help. Contact Us Today

We help clients navigate the home inspection process. Our real estate attorneys also work with clients to challenge the results of any inaccurate reports that may be negatively effecting the sale price of their home. Our real estate team understands the nuances of California’s real estate industry.  We have offices in Rancho Cucamonga, San Bernardino, and Los Angeles. Contact us by telephone at 909.980.1040 or complete our online form.

 

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California’s Probate Code: Basic Requirements Regarding Executors & Personal Representatives

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California’s Probate Code: Basic Requirements Regarding Executors & Personal Representatives

Wills, Trusts, and Estates: these are important components of a much larger, comprehensive, and complex area of the law that encompasses estate planning & administration, elder law, wealth management, Medicaid planning, estate taxes, advance healthcare directives, probate law, probate procedure, and more.

As a result, there are rarely one-size-fits-all solutions or approaches to issues that may arise out of the vastness that is estate law. That being said, there are some aspects of probate and estate law that may be addressed and/or resolved more readily than others.

In California, Who Can Serve as an Executor of a Will, And More Specifically, a Personal Representative?

Choosing an Executor of your will, who in turn, likely will serve as your Personal Representative, is a very important decision that should not be made lightly. It should involve the consideration of a number of factors, such as trustworthiness, common sense, honesty, etc.

However, once the hard (or easy) part is done and you feel you have the perfect candidate to serve as the Executor of your Will and your Personal Representative, you must determine whether he or she is eligible to serve in this capacity pursuant to the California Probate Code. If eligible, the Probate Court must appoint your chosen person as the Executor of your Estate, and thereafter, your Personal Representative.

In fact, Cal. Prob. Code § 8402 provides that, “The person named as executor in the decedent’s will has the right to appointment as personal representative.”

The Basics

In the State of California, the Probate Code specifically sets forth mandates/limitations regarding the appointment of an executor, and more specifically, a personal representative, including the following:

  • The personal representative must be at least 18 years old, which is the age of majority in California.

  • The personal representative must be of competent and sound mind and competent as judged by the court (i.e., not incapacitated).

  • An individual may not serve as a personal representative if that person is subject to a conservatorship of the estate or is otherwise incapable of executing, or is otherwise unfit to execute, the duties of the office.

  • An individual may not serve as a personal representative if there are specific grounds for removal of the individual from appointment.

  • A non-resident of the U.S. may not serve as a personal representative - UNLESS the non-resident is specifically named as executor in the will.
     

  • A surviving business partner of the deceased individual cannot serve as a personal representative if there is an objection by someone (with an interest) in the will - UNLESS the business partner is specifically named as executor in the will.

 

In addition to these statutorily-imposed directives, there are other factors that warrant consideration by you (and ultimately the court) when nominating an executor and personal representative, including the following:  

  • Whether the nominee has a conflict of interest with any other party that has an interest in the will, including the deceased individual’s heirs.

  • Whether the nominee had a business or personal relationship with the decedent or decedent’s family before the decedent’s death.

  • Whether the nominee is engaged in or acting on behalf of an individual, a business, or other entity that solicits heirs to obtain the person’s nomination for appointment as administrator.

  • Whether the nominee has been appointed as a personal representative in any other estate.

(See generally, Division 7, Part 2, Chapter 4 of the California Probate Code).

Contact Us Today to Help you With your Estate Planning Needs

If you wish to choose an executor of your will and personal representative of your estate, or if you are an executor and need guidance, the experienced estate planning attorneys at CKB VIENNA LLP can help. To learn more, contact us today at 909.980.1040, or fill out our online form.

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The California Marijuana Excise Tax: How MAUCRSA Changes Things

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The California Marijuana Excise Tax: How MAUCRSA Changes Things

After all of the discussion and debate (and voting) that went into California’s “Prop. 64” (i.e., the Medical Cannabis Regulation and Safety Act, or “MCRSA”), the California legislature has since repealed said Act and signed into law S.B. 94, (i.e., the Medicinal and Adult Use Cannabis Regulation and Safety Act, or “MAUCRSA”). Lawmakers enacted MAUCRSA at the end of June; and it has an effective date of January 1, 2018.

The new law integrates California’s rules and regulations for adult-use cannabis and medicinal cannabis.  

Among other things, one of the significant differences between MAUCRSA and the former law is with respect to the structure of California’s Marijuana Excise Tax, which is basically a tax on a tax. This is because the amount of the excise tax (see below) is added to the taxpayer’s gross receipts before California’s state and local sales and use taxes are calculated.

Important Considerations Regarding Excise Tax Calculations

MAUCRSA changes the method of calculating California’s 15% cannabis excise tax. The 15% tax now applies to the “average market price” of any retail sale of cannabis by a retailer as opposed to the “gross receipts” of the retail sale.  This change in taxation structure directly affects all dispensaries and other persons licensed to sell cannabis and cannabis products.

What is the Average Market Price of a Retail Sale?

With respect to a retail sale of cannabis, the newly-enacted law provides two definitions of an average market price depending on whether the sale constitutes an “arm’s length” transaction or a “non-arm’s length transaction. The distinction between the two types of transactions is extremely significant, as it establishes how the tax is collected and paid.

  • Average Market Price of an Arm’s Length Transaction

    • The law defines an arm’s length transaction as “a sale entered into in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction.”
       

      • In other words, an arm’s length transaction is a sale that takes place through good, old-fashioned negotiation in the marketplace.
         

    • In these transactions, the average market price is defined as “the average retail price determined by the wholesale cost of the cannabis or cannabis products sold or transferred to a cannabis retailer, plus a mark-up, as determined by the the California State Board of Equalization on a biannual basis in six-month intervals.”
       

    • With regard to these transactions, the cannabis distributor must collect the 15% Marijuana excise tax from the retailer “on or before 90 days after … the sale [from the distributor] to the retailer.”

  • Average Market Price of a Non-Arm’s Length Transaction

 

    • MAUCRSA mandates that, “In a non-arm’s length transaction, the average market price means the cannabis retailer’s gross receipts from the retail sale of the cannabis or cannabis products.”
       

    • In these transactions, a distributor, “shall collect the cannabis excise tax from the retailer on or before 90 days after the sale or transfer of cannabis or cannabis products, or at the time of the retail sale by the cannabis retailer, whichever is earlier.”
       

    • In other words, the distributor must collect the excise tax from the retailer when the retailer sells the product to a consumer, but in no circumstances later than 90 days from the sale from the distributor to the retailer.
       

    • Additionally, a retailer is responsible for collecting the excise tax from the consumer and then paying said tax to the distributor (pursuant to the required procedure).

Questions About MAUCRSA or the Marijuana Excise Tax? Speak to a Knowledgeable California Cannabis Law Attorney Today

The legal landscape is changing when it comes to marijuana, both in California and in neighboring states. With respect to the newly-enacted MAUCRSA and the Marijuana Excise Tax, rigid and comprehensive record keeping and strict compliance is imperative for those in the market. To understand what your options are and where you stand under these new rules, talk to the experienced attorneys at CKB Vienna LLP today. Call one of our three offices to schedule a consultation, or contact us using this short online form.

 

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Restrictions on Edible Marijuana Products and Manufacturing Under MAUCRSA (SB 94)

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Restrictions on Edible Marijuana Products and Manufacturing Under MAUCRSA (SB 94)

In the midst of the rapidly-changing legal landscape regarding the the sale and use of cannabis in California, one of the hot-button topics of discussion surrounds edible marijuana products. Lawmakers and members of the public have significant concerns regarding edibles’ inadvertent (or not so inadvertent) appeal to children as well as various labeling issues.

The Repeal of MCRSA and the Enactment of MAUCRSA

In our recently-published blog article, California Lawmakers Consider Edible Medical Marijuana Regulations, we discussed the possible treatment of edibles under California’s Prop. 64, otherwise known as the Medical Cannabis Regulation and Safety Act (“MCRSA”). We also noted in the article that the regulatory framework regarding the use and sale of cannabis is in constant flux.

Case in point: the enactment of S.B. 94, (i.e., the Medicinal and Adult Use Cannabis Regulation and Safety Act, or “MAUCRSA”).

This important piece of legislation signed into law in late June has an effective date of January 1, 2018. The new law, which actually repealed MCRSA, integrates California’s rules and regulations for adult-use cannabis and medicinal cannabis.

MAUCRSA and Edibles

Just as MCRSA was repealed, so too were the rules associated therewith. To date, the California Department of Health has not yet published a new set of proposed rules regarding edibles in accordance with MAUCRSA.

Although there is a very good chance that many of the regulations under MAUCRSA will be identical, or at least very similar to those created pursuant to MCRSA, we cannot be sure until the new rules hit the books.

MAUCRSA: Section 77

Until the Department of Health publishes the new rules, we can take a look at the language of Section 77 of the newly-enacted MAUCRSA which specifically states that edible cannabis products shall be:  

  1. Not designed to be appealing to children or easily confused with commercially sold candy or foods that do not contain cannabis.

  2. Produced and sold with a standardized concentration of cannabinoids not to exceed ten (10) milligrams tetrahydrocannabinol (THC) per serving.

  3. Delineated or scored into standardized serving sizes if the cannabis product contains more than one serving and is an edible cannabis product in solid form.

  4. Homogenized to ensure uniform disbursement of cannabinoids throughout the product.

  5. Manufactured and sold under sanitation standards established by the State Department of Public Health, in consultation with the bureau, that are similar to the standards for preparation, storage, handling, and sale of food products.

  6. Provided to customers with sufficient information to enable the informed consumption of the product, including the potential effects of the cannabis product and directions as to how to consume the cannabis product, as necessary.

  7. Marked with a universal symbol, as determined by the State Department of Public Health through regulation.

MAUCRSA and “Re-Manufacturing”

Although there is no language in MAUCRSA that specifically addresses re-manufacturing of edibles, it is likely that in forthcoming rules, the California Department of Health will maintain its position prohibiting licensees from remanufacturing (the process of incorporating cannabinoid extract or concentrate into snack foods or candy that are commercially available.)   

Cannabis Questions? Speak to a Knowledgeable California Cannabis Law Attorney Today.

At CKB Vienna, LLP, we know the cannabis legal landscape is changing; and we make it a priority to closely follow all developments in relevant state and federal laws, regulations, and trends. Individuals who wish to obtain licenses to manufacture cannabis - or to ensure compliance - pursuant to the new rules should speak with the experienced attorneys at CKB Vienna LLP today. Call one of our three offices to schedule a consultation, or contact us using this short online form.

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Why It’s Wise to Keep Your Business Dispute Off Social Media

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Why It’s Wise to Keep Your Business Dispute Off Social Media

When you’re facing a business dispute, you may be thinking about how to protect your business’s assets, keep your employees focused on their work, or address other concerns – not about your Facebook or Twitter account.

You may, however, have a knee-jerk reaction to broadcast the details of your business dispute on social media. And with the growing interconnection between our daily lives and our social media platforms, it may feel completely natural to so. For many people these days, posting on social media feels about as natural as breathing.

But is it really a good idea?

Keeping your business dispute away from social media might be one of the wisest decisions you make during the process. Here’s why.

Social Media Posts May Be Used Against You

Social media posts that you make about the dispute could come back to haunt you in court. Because you made the post, many of the ordinary rules governing out of court statements don’t apply. And because social media has a “social,” informal tone, a post made in a moment of anger or joking could land you in a very awkward spot in a case – or even cost you your best legal argument. In order to avoid these risks, it’s best not to comment about the situation at all.

It’s Bad for Business

Unsurprisingly, posts about business disputes on social media often have a negative effect on the business, even when you can confidently say that you and your business have done nothing wrong. Your clients and customers want to view you as a resource they can trust – not as yet another social media “talking head” who falls for drama and posturing. For these reasons, it’s best to project an image of professionalism and standing above the fray by staying silent about disputes over your social media channels.

It’s Never “Just” A Post

When we post to Twitter, Instagram, Facebook, or other social media sites, we tend to think of the “post” as the content we shared to the Internet. However, nearly all social media sites collect or embed other data in these posts, from the date and time they were made to the computer’s IP address or the GPS coordinates from which the post was made. This information is often publicly discoverable and can be retrieved even if the post is deleted – meaning that, if it can be found and used against you in the dispute, it will be.

We Help You Find Your True North

Business disputes occur often in the working world, but they shouldn’t occur at all over Facebook, Twitter, Instagram, or other similar platforms. It’s just not worth it. If you find yourself in a business dispute, the smartest thing you can do for yourself is keep calm and find an attorney who help you with your case.

At CKB VIENNA LLP, our experienced California business law attorneys can help you anticipate, address, and resolve business disputes in a manner that is consistent with your business goals. To learn more, contact us today by telephone at 909-980-1040 or via our short online form.

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California Whistleblowers: What Employers Can (And Cannot) Do

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California Whistleblowers: What Employers Can (And Cannot) Do

“Whistleblowing” is the practice of alerting the authorities when a business is engaging in activities that are illegal. Employees who blow the whistle often believe they are acting in the best interests of themselves and their co-workers, and possibly the company. However, they also cause significant challenges for their employers.

Federal and state laws protect whistleblowers in a wide range of circumstances. If you have a whistleblowing employee in your workplace, it’s important to know exactly what you may and may not do when addressing the problem. Speaking to an experienced employment law attorney can help you take an approach that is tailored to your specific situation.

What to Avoid When an Employee Blows the Whistle

The phrase “don’t shoot the messenger” is often used to mean, “When someone mentions a problem, don’t blame the problem on the person who brought it up.” When it comes to whistleblowers, “don’t shoot the messenger” isn’t just good advice: it’s also the law.

California expanded its whistleblower protections in 2014 to include workers who report violations to managers and in-house authorities, as well as to outside bodies. While guidance on many topics is still unclear and requires the help of a lawyer in specific situations, general guidelines to follow include:

  • Don’t fire the employee. Firing the employee is likely to be seen as retaliation, which is prohibited by California law.

  • Don’t take other adverse actions, like demoting the employee or reducing the hours or pay, without talking to your attorney first.

What You Can Do

What can you do when an employee blows the whistle – especially if they are also failing to meet work expectations or causing disruptions in other ways? While California has some of the most employee-friendly whistleblower laws in the nation, there are still steps you can take. Keep these tips in mind:

  • Document all interactions with the employee carefully, especially when they involve disciplinary actions.  

  • Separate decision-making so that supervisors who make decisions about promotions, raises, and terminations are insulated from those who make decisions about or investigate whistleblower complaints.

  • Contact your attorney for more specific help.

Experienced Employment Law Attorneys in Southern California

Running a business always presents unique difficulties, and dealing with a whistleblower falls under that scope. It is of great importance to know how you can or cannot deal with the situation. If you’re dealing with a whistleblower at your company, following the advice we’ve laid out may save you from a great deal of legal trouble.

Most important of all, however, is to hire the right attorney who has the experience and knowledge in business law necessary to help guide you through the process.

At CKB VIENNA LLP, our attorneys focus on helping our business clients solve problems, so that they can focus on achieving their business goals. We’ve worked with clients ranging from small family businesses to Fortune 500 companies. To learn more, contact us today by calling 909-980-1040 or filling out our short online form. We have locations in Rancho Cucamonga, San Bernardino, and Los Angeles: choose the one that is most convenient for you.

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