Corporations

What do I Need to Know when Firing a Problem Employee?

May 26, 2017 | Jaclyn Ford

As the owner of a corporation, LLC, or other business, you want employees on your team who improve efficiency and increase profits. However, as cautious as you may be during the hiring process, there is always the chance that an employee may become a problem. In some cases, talking to an employee and discussing an issue can result in them changing their behavior for the better. In other cases, behavior may get worse. You may be getting complaints from your customers, vendors or even other employees. In such cases, it may be best to terminate the employment relationship.

Often, the problem is that not many people take getting fired lightly. While California is an “at-will” employment state, meaning employees can be fired for any legal reason (e.g., non-discriminatory) or no reason at all, many people get angry and look for a reason to hold the business accountable for their job loss, even if it did nothing wrong. For example, if you excuse a male employee for being late regularly yet fire a female employee for tardiness, you may be accused of sex discrimination. Allegations of discrimination, harassment, retaliation, and wrongful termination can be made. Even if such allegations are unfounded, you could have to spend valuable time, energy, and money defending against these claims.

The experienced employment law attorneys at Structure Law Group, LLP can help you establish employment practices and employee handbooks that will allow the employment process to run more smoothly. The following are some things to consider when firing a problem employee:

How do You Treat Leases in Bankruptcy?

May 19, 2017 | Ryan Penhallegon

A commercial landlord is confronted with a number of issues when a tenant files bankruptcy. When a tenant files bankruptcy with an unexpired lease, the debtor tenant is given the option to “assume” or “reject” the lease. If the debtor elects to assume the lease, it agrees to be bound by all terms of the lease and it must cure all defaults and provide the landlord with “adequate assurance of future performance” under the lease. If the debtor rejects the lease, the rejection constitutes a breach of the lease, giving the landlord claims for damages.

Assumption or Rejection. The first question that a commercial landlord will want to know is whether the debtor will assume or reject the unexpired lease.

If the debtor assumes the lease it means that the debtor intends to remain at the property as a tenant (or possible that it plans to assign the lease to a third party). In order for a debtor to assume a lease, the debtor must either not be in default under the lease or it must cure all pre- and post-petition defaults; it must give the landlord “adequate assurance of future performance under the lease,” and it must obtain bankruptcy court approval to assume the lease.

Venture Capital Financing – Is it Right for my Startup Business?

May 12, 2017 | Structure Law Group, LLP

Venture capital financing can be an extremely important asset to startups that do not have access to other types of traditional business financing, such as bank loans or the public markets. There can be many benefits to venture capital financing for entrepreneurs, including the following:

Venture capital involves equity capital, so it does not leave a startup with substantial debt from the start;
Venture capitalists often take greater risks on young and unestablished companies because they see the potential for extensive growth and, therefore, higher returns;

What is the Importance of Letters of Intent in an M&A Negotiation?

May 5, 2017 | Katya Mezek

Corporate merger and acquisitions are highly technical transactions with a lot at stake for all parties involved. It can take thousands of hours of dedicated work to finalize this type of deal and the last thing you want is to commit time, energy, and money to the process only to have one party back out at the last minute. For this reason, the early stages of any merger and acquisition should involve a carefully drafted and negotiated letter of intent (LOI) that is signed by all parties.

What is a Letter of Intent?

Before you begin the merger and acquisition process, both parties should be on the same page regarding the basic terms of the transaction. These terms are set out in a letter of intent that the parties can review and negotiate to ensure they are in general agreement regarding the basic terms of the final agreement before they commit resources to the transaction. Though you want the terms of a letter of intent to be attractive to the other party, you should also always be realistic. Disputes can arise later in the M&A process that can halt the process and you could even be accused of acting in bad faith.

Integrating Social Media Into My Business

March 24, 2017 | Structure Law Group, LLP

If you are looking into ways to market your business online, you have undoubtedly come across articles extolling the virtues of social media marketing. Sites like Facebook, Twitter, and LinkedIn allow businesses to target certain groups of consumers with pinpoint accuracy, interact with them directly, and build brand recognition. Furthermore, there are often no costs associated with creating social media presence for your business and there are certainly ways to engage in social media marketing without spending money on paid ads. If your business posts a piece of content that goes viral, it could easily result in millions of views from individuals who may become paying customers or clients.

Unforeseen Liability

Before you rush out to join the social media marketing frenzy that is in progress, you should consider some of the legal issues that may be implicated. The good news is that it is completely possible to engage in social media marketing without incurring legal liability; it is important, however, to determine whether there are any legal problems that could potentially arise. Here are some of the potential issues to consider:

Foreclosure of a Charging Order

March 3, 2017 | Ryan Penhallegon

Foreclosure of a Charging Order

Limited liability companies (LLCs) provide their owners (members) a number of protections that do not exist for partnerships or sole proprietorship’s. One critical protection is limited liability protection. Because an LLC is considered a separate legal entity and its assets and debts are separate and distinct from any assets or liabilities that its owners may have, a creditor of an LLC member typically cannot reach or interfere with the LLC and vice versa. However, California law does provide a tool for creditors to try to reach a judgment debtor’s LLC interest. The tool is called a charging order.

A charging order is roughly akin to a wage garnishment, but instead of directing an individual’s employer to pay over a portion of the individual’s salary to the creditor, it directs an LLC in which the individual judgment debtor has a membership interest to pay over any distributions that would otherwise be made to the member to the creditor. Notably, a charging order ordinarily cannot compel an LLC to make a distribution to a member and does not confer any management rights, instead extending only to distributions made to a member. For this reason, charging orders do not always result in payment to the creditor. Nonetheless, a charging order can still be effective because they can cut-off an LLC member’s rights to receive any distributions from the LLC and may impact the member’s dealings with the LLC and its other members.

What A Startup Should Look For In An Investor

February 24, 2017 | Structure Law Group, LLP

A startup or entrepreneur looking to raise capital is willing to do almost anything to accept capital from an investor. As a corporate and business law attorney, experience with more successful clients has led to some observations about what an entrepreneur might also want to look for or consider in an investor besides capital only.

Consider the following observations when looking to attract investments.

Build Friends Not Just Investors

Should I Invest In A Resale Franchise?

February 10, 2017 | Structure Law Group, LLP

Starting a business is a difficult endeavor. While many people want the opportunity to start their own business, the time and commitment required to establish, develop, and grow a successful business are not for every potential entrepreneur. Instead of starting their own business, some individuals may look to another alternative: resale franchise.

A resale franchise is an already-established franchise business that the current owner is looking to sell. The current franchise owner may be selling his or her franchise for reasons such as a divorce, a death in the family, or even for purpose of retirement. Whatever the reason, a resale franchise provides an opportunity to dive into a business without building it from the ground up.

Investing in a Resale Franchise: Pros

Treatment of Limited Partnership (LP) and Limited Liability Company (LLC) Interests in Bankruptcy

January 27, 2017 | Ryan Penhallegon

When the shareholder of a corporation files bankruptcy, the shareholder’s stock becomes part of the debtor’s bankruptcy estate and will generally be subject to liquidation by the bankruptcy trustee for the benefit of the debtor’s creditors.

However, when a limited partner in a limited partnership (LP) or a member of a limited liability company (LLC) files bankruptcy, the debtor’s ownership interest may well be treated differently because interests in LPs and LLCs are typically considered and treated as more contractual in nature.

Membership Interests in LLCs

Are the Click Through Agreements for my Business Enforceable

January 20, 2017 | Structure Law Group, LLP

If your company sells products or services online, the purchase process almost certainly includes a click through agreement, also known as “clickwrap,” “web-wrap,” or “click and accept” agreements. This refers to the button the consumer must click to indicate they accept all of the terms of the sale. If they choose not to accept, the sale will not go through. This agreement often includes intellectual property protections for the company, license restrictions, liability limitations, disclaimers involving warranties, among other standard contract terms.

The large majority of online consumers often click through without carefully reading the terms of the agreement. If a consumer later contests a term in the click through agreement, will a court uphold and enforce the terms of the initial agreement? This is important to know, as an unenforceable agreement can result in liability and losses. Consulting with an e-commerce attorney is the best way to guarantee a legally binding contract.

Court Ruling on “Shrinkwrap Agreements”