San Jose Business Lawyers Blog

Articles Posted in Employment

More and more startups are issuing stock and other forms of equity as a form of compensation for work, especially in the early stages of a venture. This arrangement allows a business to recruit talent that they otherwise wouldn’t be able to afford and, if the company is successful, can result in a significant windfall for people who worked to get a company off the ground without a guarantee of compensation.toad-river-brown_3737_990x742

Generally speaking, when you are transferred equity in a company it is necessary to pay taxes on the fair market value of that equity as you would with any other type of income. In many cases, however, a grant of equity is subject to a vesting agreement, which means that the equity is not actually owned by the grantee until a certain period of time passes. As a result, at the time of the grant, nothing is actually owned, so there is no tax liability associated with the initial grant. When the stock vests, however, that income becomes realized, meaning that there may be significant tax liability, particularly if the company has done well.

83(b) elections can minimize tax liability associated with grants of equity

The Internal Revenue Service (IRS) has given taxpayers another option, however, in 26 U.S.C. § 83(b). Under this section, a person who has been granted equity that is subject to a vesting agreement can elect to be taxed on the entire amount of the stock’s present value. This election must be made within 30 days of the date that the equity was granted to you.

As a practical matter, it makes most sense for people to use this election if they have been granted stock in a new company that has little actual value. Because the stock is basically worthless at this time, your tax liability will be fairly low, and you will not need to pay taxes on the shares that vest each year as their value increases. The only time that you will have to pay taxes on the value of the stock you have been granted is when you liquidate it in some way, at which point it will be subject to the lower long-term capital gains tax, so long as the liquidation occurs more than a year after the state that the stock was initially granted.

Contact a Silicon Valley startup law firm today to schedule a consultation with an experienced attorney

Receiving stock or other securities in exchange for your work can raise significant issues related to your tax liability. For this reason, it is critical for anyone who is either considering issuing stock as a form of compensation or accepting a grant of stock to discuss their circumstances with an experienced attorney. To schedule a consultation with one of our Silicon Valley business lawyers, call the Structure Law Group today at 408-441-7500.


Any company with employees is aware of the fact that conflicts between people are inevitable. Conflicts can arise due to disagreements about work-related matters or because of issues that are purely personal. Fortunately, these kinds of conflicts are often resolved informally and without the intervention of an employment attorney or even the human resources department. In some cases, however, an employee may file a lawsuit against his or her employer in an attempt to hold it liable for discriminatory policies, discriminatory acts committed by management, or even the failure to address inappropriate conduct between one employee towards another.

There are several steps that California employers can take to minimize their legal liability as a result of discrimination lawsuits, some of which are detailed below.

Have an employee handbook

A well-drafted and comprehensive employee handbook can go a long way in informing both management and employees about a company’s policies and encourage people to resolve disputes through official channels. In addition, it can also put employees on notice regarding expectations, reduce the incidence of disparate treatment, and reserve certain of the employer’s rights that it would otherwise not have.

Regularly train managers and supervisors

An employer can often be held liable for the discriminatory actions of its supervisors and managers. By regularly conducting anti-discrimination training, employers can ensure that their managers and supervisors are aware of their policies and recognize workplace discrimination when it occurs. In some cases, recognizing discrimination early on can prevent it from becoming a serious issue resulting in a lawsuit.

Keep impeccable records

Issues between people are bound to arise, so it is important to be prepared to document the dispute and your response when they do. Many workplace discrimination lawsuits turn on an employer’s perceived response to an accusation of discrimination, so documenting that a complaint took place and the steps that the employer took to respond to the situation are often very important in minimizing legal liability.

Regularly audit you policies and procedures

Federal and state laws related to employment regularly change.  It is important for employers to keep their policies and procedures up to date and in compliance with all relevant rules and regulations. An attorney’s assistance can be extremely helpful in ensuring that your employment practices are in compliance with current law.

Contact a Silicon Valley business litigation law firm today to retain legal counsel

Lawsuits initiated by employees have the potential to put even an established business at significant risk. A well-publicized lawsuit can affect employee morale, productivity, and may influence your potential customers’ or clients’ perceptions of your company and its values. In addition, litigation can be incredibly expensive, especially in the event of an adverse outcome. Fortunately, sound legal advice and representation can often avoid these kinds of issues before they even start. To schedule an appointment with one of our experienced Silicon Valley business litigation attorneys, call Structure Law Group, LLP today at 408-411-7500. Prospective clients can also send us an email through our online contact form.

When drafted properly, employee handbooks encourage open communication in the workplace, set employee expectations, and shield businesses from the financial burden of legal liability. Here are 3 reasons why your business should have an employee handbook.

3 Reasons Why Your Company Should Have an Employee Handbook

  1. Establish Your Company’s Character

An employee handbook allows you to set the tone of your company. Include language in line with your vision and values and take the opportunity to provide important historical information about your business. Include a code of conduct for your employees so they know what rules to follow and what behavior is unacceptable.

  1. Make Your Policies and Procedures Known

Employee handbooks are the perfect place to house workplace policies and procedures. Workers can reference a specific document for the duration of their employment and avoid miscommunication about expectations.  This will also provide you with protection from liability. Common items to include are safety procedures, attendance requirements, dress code, a social media policy and rules for internet usage on the job.  Be sure to review your employee handbook periodically so that you can add or amend policies and procedures as your business grows.

  1. Disclaimers

Distributing employee handbooks doesn’t just formally welcome employees to the company. When properly drafted, disclaimers contained within the employee handbook can nip potential litigation in the bud.  For instance, if your employees are at-will employees, clearly state that the handbook is not an employment contract.  If a terminated employee later threatens a “wrongful termination” suit, you’ll be in a better position to protect your business as long as the reason for the employee’s termination was legal.  An experienced Silicon Valley employment law attorney can help you draft the best disclaimers for your particular business.

If you have questions about items to include or the importance of employee handbooks, Structure Law Group’s experienced attorneys are on hand to help. Contact us today at 408-441-7500.


About Structure Law Group, LLP

Structure Law Group is a San Jose based law firm that serves its clients’ business, employment and real estate needs, including but not limited to business formations, debt and equity investments, employment agreements and handbooks, commercial leasing and purchases, commercial contracts and related litigation.

Last year, California legislators passed the Healthy Workplace Healthy Family Act of 2014, which provided the opportunity to accrue paid time off for sick leave to almost every California employee. The law allows qualifying employees who have worked at least 30 days to begin accrual and to use that sick time after 90 days of employment. The law covers temporary, part-time, and full-time employees with very few exceptions. Such exceptions only apply to certain employees with collective bargaining agreements, some air carrier employees, and in-home providers of supportive services.

Because the new law so widely affects California employers, all business owners should thoroughly familiarize themselves with it to avoid legal disputes or sanctions for noncompliance.

Basic requirements for employer compliance

The following are only some of the steps employers should take to comply with the new law that went into effect on July 1, 2015:

  • Provide adequate notice to employees upon hire of their right to paid sick leave, along with having easy to read posters on the subject in the workplace.
  • Allow employees to accrue at least one hour for every 30 hours worked up to an annual minimum of 24 hours or three full days of work, whichever is more based on an employee’s typical work day. Notify employees of any qualified caps on sick time accrual.
  • Approve reasonable requests to use paid sick time.
  • Regularly issue pay stubs or other documents that clearly state how much paid time off the employee has left.
  • Keep careful records regarding accrual and use for three years.
  • Never discriminate or retaliate against an employee for use of sick time. 

The above is a simplified explanation of employer responsibilities under the new law and every business owner should discuss all of the requirements with an experienced employment law attorney as soon as possible. 

New amendments to the law already passed

On July 13th, Governor Brown signed Assembly Bill 304, which amended certain provisions of the new sick leave law. These changes were effective immediately after signing, so every business owner with employees should be aware of the changes. Here is some brief information regarding some of these amendments:

  • Companies that already had a paid sick leave or PTO policy can be grandfathered in without changing their policies provided the policy meets certain requirements.
  • In order to be eligible for sick time accrual, an employee must work with the same employer for at least 30 days in the past year, while the original version of the law did not specify where the employee had to work.
  • Employers can use different accrual methods as long as the accrual happens at regular intervals and an employee can accrue at least 24 hours of PTO within 120 days.
  • Sick day use can be limited to either one calendar year, year of employment, or 12-month period.
  • Pay rate for sick time will be based on the pay period in which the PTO was used.

Though many employers recently made substantial changes to their sick time policies in preparation for the new law to take effect on July 1st, it is now a good idea to re-examine your policies to ensure compliance with all of the applicable amendments. 

Contact an experienced business and employment attorney for assistance today

When a new law goes into effect that widely affects employers and business owners across the state of California, it is only understandable that you may have questions and need some guidance to ensure that your business complies with the new law and any subsequent amendments. Because employment laws and regulations are constantly changing, it is always a good idea to have the assistance of a skilled business lawyer who can provide valuable advice and help prevent any future legal disputes with employees. If you have questions regarding the new paid sick leave law or any other legal matter, call the San Jose office of the Structure Law Group at 408-441-7500 for help today.

In 1967, President Lyndon B. Johnson signed an historic law into effect prohibiting employment bias on the grounds of age: The Age Discrimination in Employment Act (ADEA). This act gives certain labor protections to workers over age 40. But do you know how this law affects employment at your company? Here is an overview of the ADEA and some key information to know.

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What is the Age Discrimination in Employment Act?

The ADEA specifies that any time an employer makes a decision about personnel, whether hiring, determining pay, firing, or considering position changes, it cannot factor age into the final decision.  Decision makers are not allowed to establish preferred ages in any step of the hiring process.  It’s important to note asking for a candidate’s birth date on an application however, is not illegal.

ADEA Protects Disadvantaged Demographics

Congress found older citizens are at a disadvantage in the job market after losing a long-time job. The Act is meant to give workers a boost after age 40, allowing them more work opportunities.  The ADEA additionally prevents terminations or layoffs based on age as the displacement of older workers.

ADEA Limits

The ADEA applies to employment agencies, every business with more than 20 workers, federal positions, and many labor organizations. It doesn’t protect elected officials, those in the military, and workers who are self- employed, such as independent contractors.

The Age Discrimination Act helps prevent unfair labor treatment of workers over age 40. If you have any questions on how the ADEA impacts the employment initiatives at your company, Structure Law Group’s experienced attorneys would be happy to help. Contact us today at 408-441-7500.


About Structure Law Group, LLP

Structure Law Group is a San Jose based law firm that serves its clients’ business, employment and real estate needs, including but not limited to business formations, debt and equity investments, employment agreements, commercial leasing and purchases, commercial contracts and related litigation.

Large companies frequently have corporate employee handbooks that are updated on an annual basis to reflect changes in employment laws or company policies. However, many small business owners with few employees may not see the need in having such a handbook that formally sets out employment policies and rules. While it is true that simply speaking to employees about your policies may be easier and more time-efficient than developing an official handbook, there are several reasons why it is worth taking the time and energy to do so.

employee handbook

Assistance in developing your policies

Many new business owners have not taken the time to sit down and formulate official policies when it comes to employees. Owners may be tempted to “wing it” when it comes to worker management and develop rules along the way. This can be risky, however, and can lead to disputes if there are not rules set in stone. Developing a handbook will make it necessary for you to sit down and decide what types of policies you want for your employees. This can ensure that your policies are applied fairly and evenly from the start to all workers. Continue Reading

Employment in California is generally “at-will,” which means that either the employer or employee may terminate the employment relationship at any time without good cause. However, under certain circumstances termination may be considered unlawful, and an employer can be exposed to possible liability for wrongful termination. It is important to know when termination may be wrongful under the law so that possible legal claims by former employees can be avoided.


If you have an employment contract

If you and your employee entered into an employment contract that provides job security for a specific duration, California law requires you to show good cause for terminating the employee in breach of the contract. At times, in the absence of a written contract, an employee may try to claim that an employment contract was implied based on promises or other statements made by an employer. In order to avoid any claims of an implied contract, be sure to include clear language regarding “at-will” employment in your handbooks, policies, and all communications with potential employees and employees. Continue Reading

Meal and rest breaks are mandated by the state and allow employees to re-energize and reset during their workday. Surprisingly, providing a lunch break is not a federal requirement, however allowing employees to take breaks can reduce safety-related incidents in many industries. Failing to give an employee adequate breaks can result in steep fines from the state.

Discussing of Work at Lunch

California Law: Meal and Rest Breaks

Employees in California are legally owed meal and rest breaks depending on the amount of time worked. Here are the standard requirements for meal and rest breaks under California law. Continue Reading

If you employ workers, chances are good that your business is subject to a number of labor laws enacted by the United States Department of Labor as well as the California Department of Industrial Relations. Failure to comply with these labor laws can cause a lot more than disgruntled workers; non-compliance can result in sanctions by the federal or state government and/or potential legal actions from employees to recover damages. Business owners are often not aware that they are violating the law until it is too late and they are facing costly legal consequences. The best way to preemptively avoid any labor law dispute is to consult with an experienced employment law attorney to ensure all of your policies and practices are in line with the law.


Topics Covered By Labor Laws

Labor laws such as the Fair Labor Standards Act (FLSA) and the California Labor Code cover a wide variety of topics related to employees, compensation, and more. The following are only a handful of issues that labor laws may affect: Continue Reading

California has distinct wage and hour laws in place to ensure the proper pay of employees. Employers often need clarification on California wage and hour laws. Each industry is different but here is an overview of requirements in the state.


California Wage and Hour Laws

Minimum Wage

California’s minimum wage is set at $9.00 per hour. Unlike some states, California does not allow for tipped employees to be paid less than the state’s minimum wage.


Employers often ask when they need to pay overtime wages.  Whether or not an employee is “salary” or “hourly” is not determinative of overtime pay entitlement, rather, it matters if the employee is “exempt” or “nonexempt.” “Nonexempt” employees are entitled to overtime at the rate of one and a half times their regular rate of pay for:

  • All time worked in excess of 8 hours in a workday
  • All time worked in excess of 40 hours in a workweek
  • The first 8 hours of work performed on a seventh (or more) consecutive workday

Continue Reading