Category: Client Alerts

Senate Bill 1193, passed last year, requires specified businesses and establishments to post an 8.5″ x 11″ notice, on or before April 1, 2013.

The required posting provides important information on how to report suspected human trafficking and also provides victims of human trafficking with information on where to obtain help. The notice informs the public and victims of human trafficking of telephone hotline numbers and contains information about organizations that provide services to eliminate slavery and human trafficking.

The California Department of Justice (DOJ) developed the model notice that complies with the requirements of SB 1193.

California “is one of the nation’s top four destination states for trafficking human beings,” according to the DOJ. Human trafficking, according to the DOJ, is “a modern form of slavery. It involves controlling a person through force, fraud, or coercion to exploit the victim for forced labor, sexual exploitation or both.”

If you would like more information regarding this new requirement or to determine if your business is one of the businesses specified by the new law, please feel free to contact us.

Employers can expect the Occupational Safety and Health Administration to implement various regulatory initiatives this year that will significantly impact how employers, including construction companies, do business. Many new and stricter workplace safety initiatives and regulations which have been on hold due to last year’s election are now back on the table. Heightened enforcement, more citations and increased penalties are a certainty as OSHA ups the ante for employers who are not working safely or ignore safety standards.

Schneiders & Associates, L.L.P. recommend that our employer clients stay abreast of the regulatory agenda, since when an employer is cited by OSHA for noncompliance of a workplace safety regulation, claiming lack of knowledge won’t get them very far.

The U.S. Citizenship and Immigration Services (USCIS) recently revised the Form I-9. Employers should begin using the newly revised Form I-9 (Rev.03/08/13 N) for all new hires and re-verifications. Employers may continue to use previously accepted revisions until May 7, 2013. After May 7, 2013, employers must only use Form I-9 (Rev. 03/08/13 N). The USCIS also publishes a handbook with useful information for employers to assist them in completing the Form I-9. The USCIS updated the Handbook for Employers, Guidance for Completing the Form I-9 (M-274) to include information about the revised Form I-9.  According to the USCIS, helpful new images have been added to the Handbook to illustrate how employees and employers can complete the new form. The Handbook also contains updated guidance on recording changes of name and other identity information.

We recommend that now is a good time to review your entire hiring process, from the proper form of job application to verifying your new hires are legally eligible to work for you.

The Family and Medical Leave Act notice has been revised to reflect the changes caused by the recently approved rule. The definition of “Veteran” has been revised to include both those who serve and those discharged in the past 5 years (previously it was only those who served).

The explicit definition of “Serious Injury or Illness” was removed as well, replaced by a notice that there are differences between the definition of “Serious Injury or Illness” for a service member or veteran, and “Serious Health Condition” under the FMLA.

On March 8, 2013, you are required to update any existing employment notices poster to include the revised Notice C if you are a:

• Private-sector employer, with 50 or more employees in 20 or more workweeks in the current or preceding calendar year, including a joint employer or successor in interest to a covered employer;
• Public agency, including a local, state, or federal government agency, regardless of the number of employees you employ; or
• Public or private elementary or secondary school, regardless of the number of employees you employ.

If none of these apply to you, your current 2013 poster is in compliance.

We recommend that you make sure your workplace posters are appropriately updated on or before March 8, 2013. If you have questions regarding this requirement, please contact us.

The Equal Employment Opportunity Commission, just issued a statement that it settled a case on November 9th in what it calls an “historic” class action suit under the ADA against Interstate Distributor Company for $4.85million.  The suit alleged that pursuant to the company’s “maximum leave” and “no restrictions” for work policies, the company denied reasonable accommodation to hundreds of employees and fired them. The policies were quite illegal. Under the maximum leave policy, any employee needing more than 12 weeks of leave was fired – no questions asked and no reasonable accommodations discussed. Under the no restrictions policy, an employee with a medical restriction was refused a return to work and, again, no questions were asked and no reasonable accommodations discussed. This settlement shows how aggressive the government is in protecting employee rights and requiring the need for employers to have attendance policies which take into account the need for paid or unpaid leave as a reasonable accommodation for employees with disabilities. 

By Rennee R. Dehesa, Esq.

On September 21, 2012, Senate Bill 323, also known as the California Revised Uniform Limited Liability Company Act (popularly known as RULLCA), was signed into law by Governor Jerry Brown. As of January 1, 2014, RULLCA will apply to all existing California limited liability companies (LLCs) as well as all foreign LLCs registered with the State of California as of that date. RULLCA completely displaces the current California law governing LLCs (Beverly-Killea Limited Liability Company Act, Corporations Code §§ 17000-17656) and will be codified as the new Title 2.6 of the California Corporations Code at §§ 17701.01-17713.06. This new law will apply automatically; there are no new documents that need to be filed by LLCs to fall within its purview. Also, there is no ability to “opt out.”

RULLCA serves to provide more guidance on issues that the current law, Beverly-Killea Limited Liability Company Act (Beverly-Killea), is silent on or does not clearly address. Many of the Beverly-Killea provisions are included in RULLCA, however there are some areas that are new, such as the provision that makes an LLC member’s bankruptcy a “wrongful disassociation” of the membership. 

RULLCA § 17706.01 governs the power of a member to disassociate from the LLC. In contrast with Beverly-Killea, it introduces the concept of “wrongful” disassociation and lists the circumstances when a member’s disassociation is wrongful. If the member of an LLC wrongfully disassociates, RULLCA provides that the member is liable to the LLC and to the other members for damages caused by that disassociation. Currently, Corporations Code § 17252 gives the LLC only an offset right for damages against the withdrawn member, and then only if the withdrawal is in breach of the operating agreement. RULLCA makes these damages a matter of law.

Bankruptcy as Wrongful Disassociation

RULLCA’s definition is extremely broad and poses significant risks for unwary members. Under RULLCA, any voluntary disassociation is “wrongful” if it occurs prior to the termination of the LLC, unless the LLC’s Operating Agreement specifically provides otherwise. Essentially, now instead of the law following the Operating Agreement terms to determine enforceability, the default scheme will provide stricter and broader liability for damages for withdrawing members than currently.

Bankruptcy is an area that will present significant concerns with RULLCA’s implementation in light of the RULLCA provisions that provide that the bankruptcy of a member of a member-managed LLC triggers that member’s disassociation and that the disassociation caused by the member’s bankruptcy is wrongful (§§ 17706.01(b) and 17706.02(g)). However, federal bankruptcy law preempts these sections of RULLCA, and they might not be enforceable in certain circumstances.

Under Bankruptcy Code § 365(e), a debtor’s rights cannot be terminated by ipso-facto provisions (a provision that is either a provision of an executory contract or a provision of non-bankruptcy law). RULLCA’s provisions concerning bankruptcy is trumped by Bankruptcy Code § 365. Thus, unless the bankruptcy trustee (or a debtor in possession in a Chapter 11 case) cannot assume the contract without consent of the non-debtor parties and such non-debtor parties do not grant their consent. With regard to LLCs, this means that a member’s bankruptcy CANNOT trigger disassociation of that member from the LLC unless the trustee, a successor in interest of the bankrupt LLC member, is restricted from becoming a full-fledged member of the LLC without the consent of the other non-debtor members and the other members withhold their consent.  RULLCA’s default rule is that consent is required of all members for association, however, the Operating Agreement will provide guidance on that issue and its provisions will govern over RULLCA’s default rule.

The risk comes when a trustee does not need consent of the other members to succeed to the bankrupt member’s interest, in that case, not only will the trustee be able to take over the debtor’s membership interest in the LLC but that debtor will be considered to have “wrongfully” disassociated, triggering damages liability on his/her part.

Don’t be caught unprepared for the transition from the current law to RULLCA; make sure your Operating Agreement protects the LLC and its members. Contact us to review your Operating Agreement so that your company and its members are protected.

Schneiders & Associates, L.L.P. is a multi-service law firm located in Oxnard, California with a focus in business law related matters.  For more information on our firm and services, visit our website at www.rstlegal.com.