Tagged: California

CLIENT BULLETIN: California Supreme Court Changes Standard for Classifying Workers as Independent Contractors

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CALIFORNIA SUPREME COURT CHANGES STANDARD FOR CLASSIFYING WORKERS AS INDEPENDENT CONTRACTORS

On April 30, 2018, the California Supreme Court changed the standard used to determine whether a person is an independent contractor or employee of a company.

The Dynamex Operations West, Inc. v. Superior Court case centered around whether delivery service drivers for Dynamex were independent contractors or employees. For the past 30 years, companies relied on a multi-factor test in California that focused on whether the company had control over the how the work was being completed to classify a worker. Dynamex, also relying on this standard, argued that their drivers were independent contractors because the drivers set their own driving schedules, used their own vehicles, had the ability to decline delivery assignments and could work for multiple companies.

The Supreme Court, however, adopted a new standard in the Dynamex case and ruled that the drivers were in fact employees and allowed the drivers to be certified for a class action lawsuit.

The new “ABC test” will likely make it difficult for companies to classify workers as independent contractors in California because it presumes all workers are employees unless the company can demonstrate that the worker:

A). is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of such work and in fact; and

B). performs work that is outside the usual course of the hiring entity’s business; and

C). is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

Part A of the test includes similar language from the previous test with respect to control; however Parts B and C impose new restrictions on companies being able to classify a worker as an independent contractor. For Part B, the Supreme Court provided an example that a plumber or electrician who is hired by a retailer to perform maintenance work at a retail store is truly an independent contractor because the work being provided is outside the usual course of the retailer’s business. Part C is designed to identify those workers who have decided to go into business for themselves, regardless of whether the worker has actually formed a separate entity.

With this new standard in place, companies should reevaluate existing agreements with independent contractors to ensure whether these workers are indeed independent contractors under the new ABC test or should now be classified as employees and afforded the benefits of an employee.

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School’s Back!

I am so excited to be back at Loyola Law School teaching Business Planning I: Financing the Start-Up and Venture Capital Financing this semester!

The course motivates students to consider the legal and business implications involved  in forming and operating an emerging business. The course, much like my First Time Entrepreneur Workshop, analyzes:

  • The deal cycle of a start up company
  • Selecting a business entity
  • Structuring the economic benefits
  • Management control among various owners
  • Protecting intellectual property
  • Raising capital

 

During this course law students learn to apply these ideas by reviewing and analyzing legal documents typically used in organizing and financing a start-up. The goal of the class is to prepare students for the types of projects and challenges they will one day confront as lawyers.

I look forward to this semester, I know it’ll be a great one!

 

 

 

Top 10 highlights from the StartEngine – ICO 2.0 Summit

On Friday, November 10th StartEngine hosted a summit focused on regulated ICOs.

Check out the Top 10 Highlights from the event:

  1. Management and company counsel might need to consult with local legal counsel in other countries to ensure compliance with rules and regulations of other countries. The level of compliance requirements might ultimately result in eliminating countries from the token offering. For those countries that do not get eliminated, be sure to include relevant disclosures by country (and state).

 

  1. There are several possible federal exemptions and securities regulations that can be used, such as 506(c), the Crowdfunding regulation, Regulation A+, and Regulation S. If you’re relying on more than one, be sure you’re complying with the requirements of each, as they may be different. Also, be careful to also comply with state securities exemption requirements, if necessary.

 

  1. In order to comply with the advertising rules for US and non-US investors, consider having the tokens sold in the US be different from tokens sold to foreign investors.

 

  1. Company should consider as a risk factor what the implications are if their token cannot handle the large number of users at the end of their token sale.

 

  1. “Curb your enthusiasm”, meaning what you say today in marketing and advertising can be used against you later.

 

  1. When determining whether an investor is accredited, go beyond just a questionnaire. Get bank statements or a letter from their accountant to verify income.

 

  1. The variety of possible exemptions and securities regulations all have different resale restrictions to be considered and complied with during token sales.

 

  1. Be extra diligent when doing your know your customer (KYC) and anti-money laundering (AML) checks.

 

  1. Some investors think there is too much emphasis on who the Company’s advisors are during an ICO. Instead, the focus should be on identifying for investors: (1) who is on the management team? (2) what is the opportunity? (3) what is the smart contract code itself and has it been audited? (4) what is the overall marketplace analysis? and (5) what is the company’s expectation for the use of proceeds?

 

  1. Investors should have engineers and coders on their team to look at the smart contract code during diligence.

 

If you missed the event or for more information visit: https://www.startengine.com/ico

 

Last Call! Top Ten Legal Mistakes Made by First Time Entrepreneurs on Thursday Oct. 19th

Last call to RSVP for our event tomorrow, Top Ten Legal Mistakes Made by First Time Entrepreneurs.

The event is FREE, but please register here:  https://connectpasadena.com/events/top-10-legal-mistakes-made-by-first-time-entrepreneurs.

 

Connect17 - WeWork venue

Sept. 16: First Time Entrepreneur workshop

Calling all first time entrepreneurs!

LAVA’s fall First Time Entrepreneur workshop is scheduled for  Saturday, September 16, 2017!

We will also have a special guest speaker: Venture Investor Buck Jordan, of Canyon Creek Capital

At this workshop you will learn how to:

  • Determine the value of your company
  • Put together a capitalization table
  • Understand how Venture Capitalists screen potential investments
  • Understand the differences between trademarks, copyrights and patents and when you need each of them
  • Work with co-founders
  • Network at startup events — the right way

 

For more information and to sign up, visit: First Time Entrepreneur Workshop.

 

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First Time Entrepreneur Workshop: September 16, 2017

Our fall First Time Entrepreneur workshop is scheduled for  Saturday, September 16, 2017!

At this workshop you will learn how to:

  • Determine the value of your company
  • Put together a capitalization table
  • Understand how Venture Capitalists screen potential investments
  • Understand the differences between trademarks, copyrights and patents and when you need each of them
  • Work with co-founders
  • Network at startup events — the right way

For more information and to sign up, visit: First Time Entrepreneur Workshop.

 

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Statements of Information for LLCs in California can now be filed online

The California Secretary of State’s office announced this week that statements of information for California limited liability companies (LLCs) can now be filed online.

Secretary of State Alex Padilla said the goal with implementing this online service for LLCs is to streamline the process so that “entrepreneurs can focus less on red tape and more on growing their business.” Corporations already had the ability to file statements of information online, but previously the statements of information for LLCs had to be mailed into the Secretary of State’s office.

As a reminder, statements of information are due 90 days after initial formation and every 2 years thereafter. They also require interim statements of information if any information needs to be updated.

The new online form can be accessed here: https://llcbizfile.sos.ca.gov/.

 

See the full press release here: http://www.sos.ca.gov/administration/news-releases-and-advisories/2017-news-releases-and-advisories/secretary-padilla-announces-llc-statements-information-can-now-be-filed-online-and-new-bizfile-california/.