Every entrepreneur should consider incorporating a lawyer onto their team in the modern business world. For example, a business must comply with various legal aspects before operating. For example, when you select the correct type of business entity you want to set up and choose your business name, a business attorney can help.
However, you may also realize that you still need a business attorney as the business goes forward. A business attorney helps you protect your business investments, prevent misunderstandings with your partners, and protect you from personal liabilities for business debts and legal obligations.
A business attorney protects your business interests, understands how to file legal documents for your business, knows the pros and cons of a legal situation, and generally understands the law. A business attorney can prevent you from making legal mistakes. Below are five reasons you should hire a lawyer for your business.(more…)
Corporations may spend a lot of time and money interviewing and selecting the best employees. For example, the company has to craft job descriptions, advertise the job opening, and shift through many applications. In addition, you may have to interview the shortlisted candidates and choose the most qualified person. Therefore, the company may lose a lot if this process were to halt due to legal problems.
This blog post explores the reasons you should hire an attorney to shield your business during the hiring process.(more…)
Buying into a franchise is one of the best ways to make huge profits in business. However, franchising may quickly become a regrettable decision without proper planning and preparation. That’s why you’ll find it best to take measures to protect yourself from any undesirable consequences.
Franchise agreements are challenging to navigate for someone new to the franchising business. Business persons who have been franchisors also need assistance working through franchise contracts.
One of the best things you can do to ensure your franchise deal moves smoothly is seek legal assistance. This article looks at four reasons why it is best to hire a lawyer when buying a franchise.
1. A Franchise Lawyer Helps You Assess the Franchisor
When buying a franchise, you will encounter a franchise disclosure document (FDD). The FDD contains pertinent information about the franchisor. Some information included in the FDD includes:
• The franchisor’s litigation history
• The franchisor’s financial statements
• Franchise owners’ obligations
• Supplier restrictions
• Trademark and copyright rules, etc.
You must read a franchise agreement before you sign it. However, the FDD is a hefty document, and you may have difficulty evaluating it on your own. An attorney works with a team that can review the hefty document and gives you a breakdown of the franchisor’s information.
With this information, you can decide whether or not to continue with the transaction.
2. A Franchise Lawyer Helps You Understand the Franchise Agreement
A franchise lawyer has appraised multiple franchise agreements. Therefore, they know to look into the fine print.
The person selling you the franchise will have their legal team prepare an agreement that protects them. Thus you need to ensure the terms of the contract are favorable to you. When an attorney looks over your franchise agreement, you can trust them not to miss important details.
Your attorney looks into contract clauses discussing your roles and obligations. They also consider the terms addressing the timelines for contract termination and consequences for terminating the contract before the agreed time.
Thus, with a franchise lawyer by your side, you are sure of the terms you sign in the franchise agreement.
3. An Attorney Advises You on What Works and What Doesn’t
An experienced franchise attorney knows the pros and cons of different franchise set-ups. Thus they advise you on the best way to set up your franchise.
If you are unsure whether investing in a franchise is the best choice for you, your attorney helps you evaluate the risks of the franchise to make an informed decision. They also help you choose the right legal entity for your franchise.
Because your attorney represents you, they look after your best interests. Thus, they give you more information than the party selling the franchise will. If your attorney has dealt with the franchisor, they may even give you insider information.
4. A Franchise Attorney Saves You Money
Not hiring an attorney when making a franchise deal may save you money in the short term. However, it leaves you vulnerable to future losses. Remember, a successful transaction does not eliminate the chance of future disputes.
Ideally, you could anticipate all potential disputes and include resolution measures in the franchise agreement before signing it. Otherwise, you will spend a lot of time and litigation fees resolving disputes in the future.
As a novice franchise owner, you’d be hard-pressed to spot all the clauses in a franchise agreement that may cause future problems. A franchise lawyer has extensive knowledge of franchise contracts. They leverage their knowledge to devise solutions to problem areas before they become costly disputes, thus saving you money in the long run.
You need an experienced franchise attorney if you want a good outcome in your franchise deal, and the franchise attorneys at Mohajerian are the best. Contact us today for legal assistance on your franchise deal in California.
San Diego and SDG&E Reach Agreement
On May 25, 2021, the San Diego City Council voted 6-3 to approve a franchise agreement between the city and San Diego Gas & Electric. SDG&E, an energy utility that provides gas and electric services, is a subsidiary of Sempra Energy, which is likewise based in San Diego. The agreement means that SDG&E will continue to provide energy services to San Diego residents for the next 10 years and includes an option to extend the agreement an additional 10 years. The franchise agreement was approved after a lengthy debate and public comment by 120 citizens. In exchange for providing energy, SDG&E will be paid $80 million to cover the franchise agreements while an additional $30 million will be allocated to help meet the City’s climate-related goals. In the end, the City Council and SDG&E determined that the deal, which was negotiated by Mayor Todd Gloria, was too good to pass up. The agreement has several out clauses and also allows for the city to purchase SDG&E from Sempra at the going rate and municipalize the utility under public oversight. Though the agreement is new, SDG&E has held exclusive franchise agreements to provide energy services with San Diego for over 100 years.
In Spite of Agreement, Questions Remain
Although the City and SDG&E agreed on an $80 million franchise fee for providing energy services, they are still at odds over other issues and outstanding franchise agreements. In January 2020, the City of San Diego sued SDG&E for more than $35 million after the City had to pay to move the utility company’s equipment during the Pure Water project. Then, after the previous energy services franchise agreement expired in January 2021, the two sides began bickering over SDG&E’s progress in burying power lines across the city. San Diego’s city attorney’s office has claimed that SDG&E was both overcharging for its services in burying the power lines and had engaged in a purposeful slowdown on the project while waiting for the new franchise agreements to be signed. SDG&E, however, claimed that they were not authorized to work on burying the lines after the prior franchise agreement expired, but some in the City saw that as little more than an excuse. Indeed, some members of the City Council expressed concerns that San Diego was agreeing to a massive, new franchise fee with SDG&E while the two parties are engaged in litigation over Pure Water and a contentious standoff over burying the power lines.
In spite of these outstanding issues, the City voted in favor of the new $80 million franchise agreement after it received support from a broad cross-section of individuals and groups, including San Diego residents, politicians, union members, and local business interests. A massive deal of this kind can only mean good things for other businesses and entities looking to sign franchise agreements in the State of California in the future.
Filed Under: Franchise & Distribution
CA’s Mandate Ends
In mid-May 2021, California Governor Gavin Newsom announced that the state’s COVID-19 safety mandates would be extended until June 15. But now, businesses are free to open without capacity restrictions or physical distancing limitations and fully-vaccinated persons are no longer required to wear masks in buildings. Rumors persisted that the state would keep the mask mandate in place even after reopening but this announcement brings the state into alignment with the newest Center for Disease Control guidance. This is welcome news to California franchises, which have faced numerous challenges just keeping the lights on in the wake of the pandemic and subsequent year-long lockdown. Without capacity restrictions and physical distancing requirements, franchises can finally open up and go back to making money once again. California has also brought its statewide travel guidelines into compliance with current CDC guidance, opening up even more avenues for business.
Rebuilding after a Lost Year
After more than a year of forced closures, limited capacity reopenings, and minimal foot traffic, California franchises can start to see a light at the end of the tunnel. It goes without saying that the global and local economies suffered greatly during the pandemic and, sadly, the lack of a steady stream of business caused many longtime franchises to permanently close. However, franchisors of all types can now begin rebuilding with California fully reopening for business. Allowing a return to full capacity means that restaurants finally have their full complement of tables and do not have to worry about vaccinated patrons being turned off by having to wear masks while dining. Storefronts and boutique shops are seeing an increase in foot traffic as the state reopens and people feel safe to venture out of their homes and start spending money again. Car supply and auto parts businesses look forward to increased revenues as more people return to working in offices and thus need to maintain their vehicles for the commutes. Even movie theaters look set to make a comeback with people also ready to pick up old leisure activities after the isolating shutdown. As you can see, the move to full capacity will have a positive effect on franchises of all types and franchisors must be ready.
Ready For Business
With California’s reopening, franchisors have begun to prepare for the huge increase in business. They should ensure that their franchise is fully staffed at this point to handle the uptick and that all workers understand what the changing guidelines mean for customers. Franchisors should also expect changes from customers as some guests may continue to wear masks indoors as a precaution, even though it is no longer mandated by the state. Finally, franchise owners should begin planning for a brighter future.
Filed Under: Franchise & Distribution
In late April, the Ninth Circuit Court of Appeals handed down a ruling that could have massive implications for lab
or law in California, especially for the trucking industry. In a major ruling, the Ninth Circuit reversed the district court’s preliminary injunction against California’s Assembly Bill 5, finding that the law is not preempted by the Federal Aviation Administration Authorization Act. The FAAAA preempts any state law that is “related to a price, route, or service of any motor carrier… with respect to the transportation of property.” However, the Ninth Circuit found that AB5 is a labor law of general applicability that “does not bind, compel, or otherwise freeze in
to place the prices, routes, or services of motor carriers” and is therefore not preempted by federal law.
Passed in 2019, AB5 codified and expanded the California Supreme Court’s three-pronged ABC test used to determine whether a worker is classified as an employee or an independent contractor. Following this, the California Trucking Association amended an existing complaint in federal district court to file suit to halt implementation of AB5 in the state. The CTA, which represents independent trucking companies, aka motor carriers, and 70,000 drivers who operate as independent contractors, claimed that AB5 was preempted by federal law because it would force members to be reclassified as employees after they voluntarily opted to classify as independent contractors. The district court, agreeing that the CTA was likely to succeed on the merits of its claims and that enforcement of AB5 was likely to have an effect on prices, routes, and services, granted an injunction against the implementation of AB5. The State of California then appealed the case to the Ninth Circuit.
The Ninth Circuit’s Ruling
The 2-1 ruling, authored by Circuit Judge Sandra S. Ikuta, a George W. Bush appointee, the Ninth Circuit reversed the lower court’s injunction. Although AB5 would raise costs for trucking companies by forcing them to hire more employees to remain compliant, the court held that this is not enough to cause federal preemption. Instead, the majority relied on Ninth Circuit precedent to find that the effect of AB5 would not interfere to the point where “it compels a result at the level of the motor carrier’s relationship with its customers or consumers.” The court further rejected the CTA’s claims that AB5 must be preempted because implementation would cause some small trucking companies to shutter and force others to leave the state, leaving the remaining companies providing “diminished services.” The majority stated that Ninth Circuit precedent isclear and that it has consistently rejected arguments that state law must be preempted by federal law on the basis of these kinds of “indirect effects” on the trucking industry. Circuit Judge Mark J. Bennett, a Donald Trump appointee, provided the lone dissent, stating that AB5 “significantly impacts the services motor carriers provide to their customers” and should thus be preempted. The ruling in California Trucking Association v. Bonta now paves the way for implementation of AB5 in California.
Source: CA Trucking Assoc. V. Bonta, https://cdn.ca9.uscourts.gov/datastore/opinions/2021/04/28/20-55106.pdf
Filed Under: Labor & Employment
Gig Companies Take Another Blow in the Courtroom
Earlier this year, gig economy companies operating in California lost another lawsuit seeking to allow them to determine questions of gig worker classification via private arbitration instead of using the courts. On April 22, the Second Appellate District of the Court of Appeals of the State of California invalidated an arbitration provision in Uber’s contracts that would have waived the right for workers to file a suit against the company under California’s Private Attorney General Act. Uber argued that this contractual provision meant that issues such as gig worker misclassification and labor law violations must first be decided in arbitration before the worker could sue under PAGA, but the courts once again declined to adopt this position. With this loss, Uber joins other gig companies like Zum Services and Skip Transport, both of which have previously failed to halt PAGA lawsuits on the basis of contractual arbitration waivers. With this series of courtroom setbacks, it appears that gig companies operating in California will be faced with the possibility of incurring significant liability if workers take them to court under PAGA.
What is The Private Attorney General Act?
Codified in 2004, California’s PAGA is an expansive law that allows “aggrieved employees” to file lawsuits on behalf of themselves, other employees, and the State itself for violations of California’s labor laws. Despite the fact that private individuals bring the claim themselves, California courts have routinely held that a PAGA lawsuit is not “an individual action at all, but instead is one that is indivisible and belongs solely to the state.” Indivisibility is key because gig companies have repeatedly argued that worker classification questions are “threshold issues” that must be settled first to determine whether the worker is indeed an aggrieved employee or simply an independent contractor. Further, gig companies argue that any such threshold issues should be decided in private arbitration according to contractual provisions because independent contractors have no standing to sue under PAGA in the first place. However, California courts have rejected this argument outright, finding that there are no divisible threshold issues in PAGA cases and that courts, not private arbitration, should determine whether the aggrieved employee was actually aggrieved and actually an employee. Likewise, courts have found that a worker’s right to file a PAGA lawsuit cannot be waived and that any arbitration provision that seeks to do so is unenforceable and invalid.
What Does it Mean for Companies?
Uber’s loss in the courtroom appears to be even more evidence that California courts will protect a worker’s right to sue under PAGA, regardless of any possible threshold issues. Gig companies operating in California should be aware of the increased risk and potential liabilities they face from PAGA lawsuits and that contractual waivers appear to be unenforceable in the state. However, it is unknown how Proposition 22, the voter-approved ballot initiative that exempts most gig workers from the state’s worker status laws, will affect existing and future PAGA lawsuits going forward.
Filed Under: Labor & Employment
Two Flexible Work Schedule Bills
With America reopening in the wake of the covid-19 pandemic, employees are returning to the office after working remotely for more than a year, but some may not be able to come back for various reasons. In order to ease the transition for all parties involved, two bills were recently introduced before the California legislature that would give employers and employees the power to agree to mutually-beneficial flexible work schedules. The two pieces of legislation, Assembly Bill 230 and Assembly Bill 1028, introduced in January and February 2021, respectively, would create a narrow new exception to the existing 8-hour overtime rule by giving employees the right to request a remote, flexible work schedule of up to four 10-hour days per week. However, under this new arrangement, the employer would not be required to pay increased overtime wages for the 9th and 10th hours of each workday as is normally required by state law. AB1028 would also allow employees working these flexible schedules more leeway when planning their meal and rest breaks throughout the workday. With the introduction of these bills, it seems clear that California is prepared to give both employers and employees additional benefits to make flexible work schedules easier to create and maintain.
Give and Take
While AB230 and AB1028 would put more power into the hands of employees by giving them the ability to request remote, flexible schedules, it should be noted that employers are not required to approve the request and that nothing introduced in either AB230 or AB1028 is mandatory. Additionally, the flexible work schedule may be discontinued at any time by either the employer or employee giving notice to the other party, so it’s not a permanent imposition. Further, employers who agree to a flexible work schedule are no longer required to pay the overtime rate unless the employee works more than 10 hours in a day or 40 hours in a week, which provides some economic relief and incentive. So these bills would not be all bad for employers as they provide some impressive carrots for employers who have the capacity to allow their employees the opportunity to work remotely.
Though employers may be skeptical of such changes and allowing more employees to work remotely, it must be noted that AB230 and AB1028 are both still pending in the California Legislature. Both bills have been referred to the Committee on Labor and Employment where they will be subject to further debate and scrutiny by committee members before an eventual vote is taken and AB 1028 has also been referred to the Committee on Judiciary. All of this means that the bills face some hurdles and could be changed or outright rejected before the full legislature ever gets a chance to vote on them. In the meantime, employers should consider the possible impact of this legislation when making plans for how and when they will let employees who can’t return to the office work remotely.
Filed Under: Labor & Employment
What is the Families First Coronavirus Response Act?
In response to the COVID-19 situation, the Families First Coronavirus Response Act (FFCRA) was passed. The act provides support to individuals and small businesses affected by COVID-19.
|Note: If you have any questions regarding the FFCRA, please contact your accountant or legal professional.
If you have fewer than 500 employees, you’ll have access to three new provisions to help your business and your employees during this time. The law goes into effect on April 1, 2020 and expires on December 31, 2020. If you have fewer than 50 employees, you may be able to get a waiver exempting your business from these new requirements.
Update: With the passage of the Consolidated Appropriations Act and the American Rescue Plan Act of 2021, employers can continue to voluntarily allow the use of FFCRA leave through September 30, 2021.
|Entering this paid leave time in QuickBooksSelect the product that you use to learn how to pay your employees effected by COVID-19: QuickBooks Online Payroll and Intuit Online PayrollQuickBooks Desktop Payroll
What do I need to do about the Coronavirus Response Act?
Provide National Paid Sick Leave to your employees due to COVID-19
National Paid Sick Leave allows your employees to get paid sick leave for either of these two reasons:
- They’re sick and quarantined from COVID-19
- They’re taking care of a family member who is sick or impacted with COVID-19
When a full-time employee is impacted or sick from COVID-19 and quarantined, they can receive up to 80 hours of paid sick leave at 100% of pay over a two-week period. Part-time employees can receive an average amount of hours they’d work over a two-week period.
When a full-time or part-time employee needs to take care of someone who is sick or impacted with COVID-19, they can receive up to 80 hours of paid sick leave at 2/3 of the employee’s average rate of pay.
As the COVID-19 situation continues to evolve, the stipulations for taking paid leave may change. If the employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretary of the Treasury and the Secretary of Labor, they use the paid leave.
Provide employees with public health emergency leave under the FMLA
Although the Family and Medical Leave Act traditionally has required employers to provide unpaid leave for qualifying circumstances, the Coronavirus Response Act amended the FMLA to add a paid-leave requirement related to COVID-19.
After 10 days of unpaid leave, a period of paid leave would follow for employees who need to care for children younger than 18 whose school or child-care facility is closed because of the virus or whose child-care provider is unavailable because of the outbreak.
This leave provision is available to all employees who have worked for you for at least 30 days regardless of the number of hours worked. Employees can elect to use another form of leave to cover the first 10 days of unpaid leave, including the new National Paid Sick leave, but are not required to do so.
Use a Federal tax credit to pay for the cost of providing leave to your employees
Once the law goes into effect, you can apply for these tax credits when you run payroll. By entering this leave time in your QuickBooks Online Payroll or QuickBooks Desktop Payroll, you’ll be able to immediately apply 100 percent of the qualified leave wages to reduce and/or receive a refund of your Federal Payroll Tax liability amount due. This includes any health care premiums you pay on behalf of your employees.
In the next few weeks, QuickBooks will be helping you apply these credits to your payroll to ensure you’re compliant and using these credits correctly.
Where can I find more information?
If you have any more questions about the act, check out:
- Families First Coronavirus Response Act: Questions and Answers
- The IRS’s page on Coronavirus tax relief
Filed Under: Labor & Employment
What is the CARES Act?
The CARES Act is federal legislation designed to offset the impact COVID-19 has had on the U.S. workforce and economy. It was signed into law on March 27, 2020. The new law infuses $2 trillion into the U.S. economy through a combination of federal relief loans, such as those available under the Paycheck Protection Program, unemployment benefits, tax credits, and other benefits.
The CARES Act has two important components for eligible employers: an Employee Retention Credit and a deferral of the employer share of 2020 Social Security taxes. If you continue to operate and pay employees during 2020, you may be eligible for one or both of these benefits. See below for more information.
|Note: If you have any questions regarding the CARES Act, please contact your accountant or legal professional, or see the IRS website for more details.
How do these benefits interact with other CARES Act relief programs?
If you receive a loan under the Paycheck Protection Program, your ability to receive benefits through other components of the CARES act may be reduced or eliminated.
- If you received a loan through the Paycheck Protection Program, whether or not any portion of that loan is forgiven, you’ll be unable to claim the Employee Retention Credit.
- If you received loan forgiveness through the Paycheck Protection Program, you’ll be unable to defer the employer share of 2020 Social Security taxes for any deposits due after the date of the loan forgiveness.
- If you have any taxes that were due to be deposited on or prior to the date of the loan forgiveness, you can continue to defer these tax payments until the applicable payment dates in 2021 and 2022.
|Track the provisions found under the CARES Act in QuickBooks Track your deferral payments for Social Security tax paymentsSet up and track the Employee Retention Credit under the CARES Act
What is the Employee Retention Credit?
Under the CARES Act, an eligible employer may be able to offset the impact of COVID-19 with an Employee Retention Credit. You must continue to pay employees during a COVID-19 related closure and carry on a business at some point during 2020 to be eligible for the credit, but all operations of a tax-exempt organization are treated as a trade or business under the statute.
A qualifying closure occurs during any calendar quarter of 2020 in which:
- The operation of your trade or business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19); or
- Your gross receipts are less than 50% of your gross receipts for the corresponding quarter in 2019
This credit is not available to businesses that receive a loan under the Paycheck Protection Program.
Generally, if your business meets these requirements, you may be eligible to receive a tax credit that includes, but is not limited to:
- A refundable tax credit for up to 50% of the total wages paid to employees during the closure.
- The maximum you can receive is $10,000 of wages ($5,000 of credits) per employee.
What employees and wages can be included in computing the Employee Retention Credit?
The Employee Retention Credit is a refundable tax credit for up to 50% of qualified wages up to $10,000 of wages from March 13, 2020 to December 31, 2020. Meaning, you can take up to $5,000 in credits per eligible employee until the end of 2020.
|Update: With the passage of the Consolidated Appropriations Act and the American Rescue Plan Act of 2021, the Employee Retention Credit has been extended to December 31, 2021. The Qualified Wages for the credit were increased to 70% (up from 50%) of up to $10,000 per quarter through December 31, 2021. The definition of a large employer was also updated to employers that had more than 500 employees on average in 2019 (it was originally more than 100 employees on average in 2019). Additionally, beginning June 30, 2021, a feature was added for new businesses that have been operating after February 15, 2020.
Your workforce size
The wages an eligible employer can include depends on the average number of full-time employees it had during the calendar year 2019.
Average of more than 100 employees
If you had an average of more than 100 employees, you can claim any wages paid to employees who are not working due to the closure.
Average of more than 100 or fewer employees
If you had an average of 100 or fewer employees, you can claim any wages paid to an employee, working or not, during the closure.
Coordination with employer portion of health plan expenses
If your wages include the employer portion of group health care costs, you may include these expenses in the qualified wages. For the purposes of the credit, you may include this expense in the calculation of the qualified wages.
Coordination with other wage credits
If you received a credit from other wage credits, such as one’s found under the FFCRA, you may not include those paid leave credits as qualified wages in your totals for the Employee Retention Credit.
You can’t include wages for any employee’s wages from claims to Work Opportunity Tax Credit or other claims paid from the family and medical leave credit under Section 45S of the Internal Revenue Code.
How can I defer payment of the employer portion of Social Security taxes?
Under the CARES Act, you may be able to defer your payment of the employer share of the Social Security taxes (6.2% of wages up to the Social Security ceiling) that accrue from March 27, 2020 through, and including, December 31, 2020. 50% of the deferred Social Security taxes are due by December 31, 2021, with the remainder due by December 31, 2022.
|Important: You, as the employer, are responsible for tracking and submitting the deferred payments.
The deferral of Social Security taxes is not available for taxes that are due to be deposited after you receive debt forgiveness under the Paycheck Protection Program.
Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly, and the information contained herein be outdated. Please refer to the latest guidance from SBA and Treasury to confirm current program rules. The funding described in this email is made available to businesses located in the United States of America and are not available in other locations. This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.
Filed Under: Labor & Employment