Articles Posted in Corporations

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Starting a business partnership can be very exciting. You are ready to hit the ground running with your new venture. However, you will want to pause and make sure you have your legal interests well documented and in order before you jump into starting the business. The corporate attorneys at Structure Law Group understand the intricacies of forming a partnership and putting safeguards in place should a problem later arise.

California Partnership Legal Classifications

General Partnership

Fotolia_206780729_Subscription_Monthly_M-300x129Hiring a new employee is an important business decision that can impact your business’s success. You must take the necessary steps to protect both your business and keep your employee happy, especially today when the unemployment rate is at a historic low . If your San Jose business is considering hiring a new employee, there are some things you might consider.

Confidentiality Agreement

Your business likely has certain information it must keep confidential. This might be company trade secrets, business methods, and sensitive employee or customer data and information. Liability concerns and legal compliance with laws (e.g., HIPPA) require a business to have safeguards in place. One of these safeguards might include a confidentiality agreement.  A confidentiality agreement is a specially crafted legal agreement that an employee signs upon acceptance of his or her employment, or inherently agrees to through the employee handbook. The agreement should include remedies if an employee breaches the confidentiality agreement. A skilled San Jose business attorney can assist your business in drafting the necessary agreement tailored to your business’s needs.

Fotolia_180008799_Subscription_Monthly_M-300x200Startup companies often use stock options to attract new quality talent. If you have decided to do so, there are some special considerations when deciding the best approach to compensate your employees. Two common approaches include restricted stock and stock options.

What is Restricted Stock?

Restricted stock is a stock plan that gives particular employees a right to purchase stock shares. These restricted shares may be at a discounted value, fair market value, or even at no cost. Despite the right to buy the restricted stock, the shares are not actually owned by the employee until a particular triggering event occurs. For example, a company may restrict the transfer of the stock until a particular amount of time has elapsed (e.g., three years from the date of hire). Another example would be a condition regarding company performance (e.g., $1m in gross revenue). The employee then takes possession after the triggering event occurs, thereby lifting the “restriction” on the stock.

Fotolia_194134312_Subscription_Monthly_M-300x200It may seem simple to try and put together a shareholder agreement on your own. However, a carefully drafted shareholder agreement is imperative to how your business functions in the present, but more importantly how you might need to handle things in the future. You will want your shareholder agreement to be carefully drafted to match your business’ specific needs. Even though every shareholder agreement will be different, there are some common components that most shareholder agreements include.

Governance Procedures

The shareholder agreement can outline how often meetings should be held. It can also describe the process for general or special meetings, quorum needed for specific types of matters, and how notices for the meetings should be sent. The addition of theses details not only spells out the procedural process, but also notifies members of their duties and rights as a shareholder.

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It seems almost once a week there is data breach in the news-Facebook, Experian, Target, Delta Airlines. The list goes on and on. San Jose business owners have a legal obligation to protect their customers’ personal information (also called Personally Identifiable Information or PII). Every business, regardless of the size, should have a privacy policy and measures to safeguard PII. This is especially true if your business collects user information online or stores sensitive employee information.

What is Personally Identifiable Information (PII)?

PII is any information that can be used to identify an individual’s personal identity. There are many definitions, but most often the following list is considered PII:

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Uber is almost an institution in many of our daily lives, much like Google, Amazon, or Apple. But even though many of us may simply think of Uber as the name that fulfills many of our transportation needs, it is still a company – it has offices, hires people, fights for its rights, and makes corporate policies and decisions. To this end, over the last several years Uber has been making headlines, and one reason for this is that the way in which Uber classifies its drivers has come under heavy scrutiny. In the past, Uber has been involved in heavy litigation in order to classify its drivers as “independent contractors” as opposed to employees (discussed further below), and a recently settled case involving this very issue will have a lasting effect on this classification.

Independent Contractors vs. Employees

The IRS treats independent contractors and employees very differently for tax purposes. According to the IRS, an independent contractor is a person who has a high degree of control over their work . Independent contractors are also typically not offered benefits.

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In the tech-rich culture of San Jose, protection of intellectual property and consumer data is a constant concern for business owners. How can owners invoke legal protection for these assets in order to protect their legal interests and reassure customers that their data is secure? The answer depends upon the different types of liability a business can face when consumer data is compromised.

Contractual Liability

Contractual liability arises when one (or more) parties in a contract fail to fulfill their responsibilities agreed upon in the contract. Many technology companies have contracts with consumers. These are often contained in the Terms of Service issued to users of mobile apps or software. Some can be more detailed – especially when the company is hired to perform a specific service to the customer. For example, when a company provides customers with secure data storage based on a private server or the cloud, the Terms of Service are typically very inclusive. If such consumer data is compromised, a technology company can face contractual liability for failing to provide the secure data storage offered by the terms of the contract.

Fotolia_183822998_Subscription_Monthly_M-300x176Many San Jose business owners find themselves embroiled in legal disputes with vendors, clients, employees, contractors, and other business relationships. It is highly likely that a legal dispute will arise at some point during your business operations. It can be difficult to know how to resolve such a dispute. Litigation can subject a business to unnecessary time, effort, and costs which will not always be reimbursed after a trial. Yet in some cases, litigation remains the only method of effectively preserving important legal rights.

Mediation and arbitration provides clients with the ability to settle their claims quicker and for less expense. However, one of the biggest cons of mediation and arbitration is the fact that neither party will be totally satisfied as the result of settlements is a compromise.

The experienced San Jose corporate attorneys at Structure Law Group have extensive experience in litigation, mediation, and arbitration.They can help you determine how best to protect your financial and legal interests in a business.

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A lawsuit can be an overwhelming experience for any business owner – particularly if you have not previously had any dealings with the court system. But it’s not cause for panic. The skilled employment law attorneys at Structure Law Group can help San Jose employers resolve such disputes through litigation, arbitration, the Labor Commissioner, mediation, or simple settlement negotiations. The experience of a knowledgeable attorney can allow for fast and effective resolution of employment claims with the least expense possible.

The Many Strategies for Dispute Resolution

Sometimes, a motion to the court can be used to end the litigation before it begins. This is what Yahoo’s legal team did to effectively end a gender discrimination lawsuit that had been filed against the company. The San Francisco Chronicle reports that the tech giant had been sued by a former manager who alleged that the company’s performance evaluation system could be manipulated to produce a gender bias. In an interesting twist, the bias was alleged to favor women, and the lawsuit was filed by a male manager who claimed to have been treated unfairly by it. Yahoo maintained that the manager had been fired as a result of his poor performance. A federal judge dismissed the case before Yahoo incurred the expense of discovery, mediation, arbitration, or settlement negotiations.

Fotolia_92329578_Subscription_Monthly_M-300x213Despite the fact that everyone is entitled to their day in the court, the reality is that most cases do not make it to trial.  Many clients will approach their lawyers with the hope that they will be able to quickly get in front of a judge and explain their story—a vision of American justice that is reinforced in popular media and Court TV.  However, the reality is that it takes a long time to get to the point when a party can tell its story directly to a Judge.  In most situations, the cases take earlier exit ramps, such as informal out-of-court settlement, non-binding mediation, binding arbitration, or a ruling by the Court before trial.  If a case does make it to trial, the parties often settle on its eve.  Often, the cheapest and most efficient way for a dispute to get resolved is for attorneys to work on an out-of-court settlement.  This can occur at any point either before or after a lawsuit has been filed.  Under this track, attorneys informally negotiate a resolution.  If the parties agree to it, the attorneys will memorialize the resolution in a settlement agreement.  This is often the quickest way to resolve a case, as it does not require any third-party intervention—it only requires parties who are willing to work together to settle their differences and capable counsel to guide the parties through the process.

In addition to out-of-court settlements, cases often get resolved with the help of a third-party neutral.  The decision of this third-party may be binding depending on the posture of each case.  For instance, cases often go to non-binding mediation before they move on to trial.  Indeed, more and more courts are requiring this step before allowing the case to move to trial.  With a non-binding mediation, the parties all present their cases to a neutral, who tries to facilitate a settlement agreement.  In short, non-binding mediation is like the informal out-of-court settlement discussed in the previous paragraph, with the addition of a third-party neutral who helps ease things along. Sometimes, cases may end up in front of a third-party neutral who has the authority to make a binding decision.  For instance, if the parties previously signed an agreement for binding arbitration, the case may end up in front of a private judge whose decision is final.  In other instances, the parties decide to submit their case to binding arbitration at the time of the lawsuit for a variety of reasons, such as cost and efficiency. If the case does actually end up in court, it is still unlikely to reach trial.  The purpose of trial is to get to the truth of what actually happened in a conflict, so if there is no dispute about what actually happened, a judge might rule on the case early based on a dispositive motion like a summary judgment motion.  With a summary judgment motion, the moving party argues that there is no dispute of fact in the case, so the judge has no finding of fact to make in a trial and can proceed to a ruling earlier. If a party brings a summary judgment motion, it has the burden of providing evidence that there is not any dispute of fact in the case.  This evidence may come in a variety of forms, including affidavits, declarations, and discovery responses.  If a judge is persuaded, it may decide to rule on the case right there. As you can see, getting to trial is an involved and lengthy process with the potential for a lot of different early exit ramps.  If a case does make it all the way through the end of trial, it may take a long while to do so.  For instance, a timeline of one year would be a relatively quick timeline in most cases, and it is not uncommon for cases to take several years to make it from beginning to end.

Contact the Experienced California Business Litigation Attorneys at Structure Law Group