January 2012 Archives

Santa Clara County Has Implemented a California Traffic Infraction Amnesty Program

January 30, 2012,

Cut the cost of your old unpaid traffic tickets in half! If one of your new year's resolutions involves clearing out that old traffic ticket that you either failed to show up in court for, or just didn't pay on time, a new Santa Clara County amnesty program may be right for you. From January 1, 2012 through June 30, 2012 you may be able to get rid of an outstanding traffic case that was due in full before January 1, 2009 by paying 50% of the fine. The case must have been within Santa Clara County, which includes the cities of Santa Clara, San Jose, Sunnyvale, Cupertino, Milpitas, Monte Sereno, Palo Alto, Mountain View, Los Altos, Los Altos Hills, Saratoga, Campbell, Los Gatos, Morgan Hill, and Gilroy.

To determine whether you are eligible for to participate in the amnesty program or to find out more information, you may go to the Santa Clara County Court's website .

Catching Up On New California Employment Laws For 2012

January 23, 2012,

With the new year comes new laws, and businesses in the San Jose area should be aware of the new California employment laws that are on the books in 2012. Ensuring compliance with these new laws is good for the bottom-line, as it will make for happy employees, who will in turn make for satisfied customers. Making sure that your business complies with the new laws put on the books each January 1st may help your company avoid employment-related litigation.

Hiring Practices
Starting in 2012, employers may no longer obtain consumer credit reports about employees and job applicants. There are exceptions to this law, particularly for positions requiring access to bank or credit card information and other personal information, positions that include access to $10,000 or more during the daily course of business, positions involving signatory authority, and management positions.

Also, at the time of hire, employers must now provide notice to new nonexempt employees of the following information: pay rate; overtime rate; form of pay (hourly, salary, commission, other); a list of allowances that are included as part of the minimum wage; name, principal address, and telephone number of the employer; and the regular pay day designated by the employer. The employer must provide written notice to employees within seven days of any changes to this information.

Finally, the penalty for willfully misclassifying employees as independent contractors is now between $5,000 and $25,000. This five-fold penalty increase underscores the importance of properly classifying new hires.

Employee Leave
All employers with five or more employees must maintain and pay for a group health plan for any eligible female employee who takes Pregnancy Disability Leave for up to a maximum of four months during a 12 month time period. These benefits must remain at the same level as though the employee had been working during the leave. These requirements extend beyond those of the federal Family and Medical Leave Act.

The law regarding organ and bone marrow donor leave has also been clarified for 2012. During a one year period, employees are allowed 30 days of leave for organ donation and 5 days of leave for bone marrow donation, with the law now stating that the leave days are to be calculated as business days.

Discrimination Law
The California Fair Employment and Housing Act (FEHA) has been amended to prohibit employers from discriminating against employees based on genetic information, including genetic tests of an employee or his or her family members, and the existence of a disease or disorder in family members of the employee. FEHA differs from a similar federal law in that FEHA applies to employers with five or more employees, while the federal law covers employers with 15 or more employees.

FEHA has also been updated to clarify that discrimination on the basis of gender identity or gender expression is prohibited. Previously, only the term gender identity was used. Gender expression is defined as, "a person's gender-related appearance and behavior whether or not stereotypically associated with the person's assigned sex at birth." Employee dress codes must allow employees to dress in a manner consistent with both the employee's gender identity and gender expression.

Additionally, health care service plans and health insurance policies issued to California residents must provide equal coverage to domestic partners as that provided to spouses. While this has been the standing policy in California, the new law ensures that employers located outside California and with a majority of employees located outside of California must comply with California law as it pertains to California residents.

Wage and Hour Laws
Employees alleging violations of the minimum wage may now recover liquidated damages as a result of a complaint heard before the Labor Commissioner. Liquidated damages, which serve to punish the employer, are permitted in an amount equal to the unpaid wages owed to the employee. Put simply, for every dollar an employee is awarded in unpaid wages, the Labor Commissioner is authorized to award an additional dollar in penalties. Previously, employees could receive liquidated damages only after filing a complaint in civil court.

In the prevailing wage arena, which applies to specified state or federal public works contracts, the minimum penalty for wage violations has been raised from $10 to $40 per day for each worker paid less than the prevailing wage, and the maximum has been raised from $50 to $200.

When it comes to new year's business resolutions, some cannot fall by the wayside. Resolving to make sure that your business is in compliance with the new California employment laws for 2012 is an easy resolution to keep, and one that will help keep your employees happy and avoid costly litigation.

Continue reading "Catching Up On New California Employment Laws For 2012" »

Update: IRS Mileage Rate for 2012, New 401(k) Maximum Contribution Amount

January 18, 2012,

Mileage Rate:

Keeping up to date with the standard mileage rate is important for me as a business lawyer because I often drive to meetings, as well as for my small business clients in San Jose and all over Silicon Valley who will be using that rate to figure out their tax deduction for miles driven in the operation of their businesses. In addition, it is also usually the rate at which businesses agree to reimburse their employees for miles driven while on the job. The IRS has confirmed that the standard mileage rate for the use of business vehicles in 2012 will remain the same as it was for the final six months of 2011, at 55.5 cents per mile (which was higher than the previous 51 cents in early 2011). The mileage rate for medical and moving expenses actually goes down by half a cent to 23 cents per mile, but the mileage rate used when driving for charity is still unchanged at 14 cents per mile.

401(k) Contribution Amount:

Another small but important change is the maximum 401(k) contribution amount, which goes up this year from $16,500 to $17,000 for 2012, with taxpayers born before 1963 being able to put in as much as $22,500.

California's New Green Corporation

January 10, 2012,

Many profit-driven companies in California interested in providing a positive social and environmental impact experienced the problem of maintaining a fiduciary duty to their shareholders and being charitable and green at the same time. Effective January 1, 2012, this should be less of a problem as the state has adopted two different types of corporations - the "flexible benefit corporation" and the "benefit corporation" - offering businesses in Silicon Valley and elsewhere in California, the opportunity to operate with a view toward both increasing shareholder value and fulfilling socially beneficial goals.

The primary differences between the two corporations, often called "B corporations", lies in the purpose flexibility allowed, and the extent of disclosure required. Greater flexibility means greater disclosure.

Purpose

The flexible benefit corporation has greater freedom in defining alternate purposes for the corporation. It may engage in charitable and public purposes and, unless it is a professional corporation, add additional specific purposes.

The benefit corporation, however, must pursue a general public benefit as defined in detail in the statute. The general public benefit must also have a material positive impact on society as measured by standards developed by a third party. A director of a benefit corporation is subject to a duty of care, but is allowed to take into account the impact of a particular decision on a number of workforce, consumer, social, or environmental issues, and can consider interests of any other person or group. A director is free to change the weight the director gives to different impacts and considerations unless the benefit corporation's Articles of Incorporation provide otherwise.

Formation or Conversion

Both types of B corporations can be created at formation, or by merger, reorganization, or conversion. Both require 2/3 shareholder approval for changes, such as where a standard corporation is converted into a B corporation, or where a standard corporation is merged into, or sells all or substantially all of its assets, to a B corporation. A company interested in changing its legal status to a "B corporation" should consult with a corporate law attorney to see if a B corporation is right for it.

Disclosures Required

The flexible benefit corporation must send an annual report to its shareholders within 120 days of the end of its fiscal year. The annual report requires a special purpose management discussion and analysis, which must include, among other things, analysis of management's effort towards achieving its special purpose. Current reports are also required 45 days after the corporation makes any expenditure, excluding compensation, made to further the corporation's special purposes, or withholds a similar planned expenditure. Corporations with less than 100 shareholders are not required to prepare the above reports if 2/3 of the shareholders have provided unrevoked waivers. Subject to reasonable confidentiality requirements, the reports must be posted on the corporation's website.

Similarly, the benefit corporation must deliver an annual report to each shareholder. The report must describe a number of issues, including the manner in which the benefit corporation's general public benefit was pursued, and an assessment of its performance. Unlike a flexible benefit corporation, management's efforts must be assessed against a third party standard to determine overall corporate social and environmental performance. As with the flexible benefit corporation, the annual report must also be posted on the corporation's website, or provided free of charge.

This discussion only touches the surface. Each of the two types of corporations has highly technical requirements which need to be followed to take advantage of these new forms of doing business.