Commercial Law Articles | Fremont, Hayward, San Leandro, Milpitas

Business legal services in Silicon Valley

Common Mistakes Made in Contract Agreements

Contract agreements are the basis of most commercial transactions in California. Whether you are starting a business, buying or selling a company, entering an agreement with a vendor/distributor, or hiring a new employee, you will benefit from a professionally drafted agreement that establishes and protects your rights and interests.

A proper contract is all about the small details. Even a relatively minor error could cause serious headaches for you or your business. With guidance and support from a local contract attorney, you can help avoid the most common mistakes. Here are four common mistakes made in contract agreements to watch out for:

1. Failing to Draft a Written Contract

You can enter a contract agreement without writing anything down. Oral contracts are (often) enforceable in California. Under Cal. Civ. Code § 1622, “all contracts may be oral, except such as are specially required by statute to be in writing.” That being said, it is almost always a mistake to rely on an oral agreement. Not only does a written agreement clarify expectations and avoid misunderstanding, but it will make it much easier to protect your rights should a dispute arise.

2. Copying and Pasting a Template Agreement from the Internet

It does not take much internet research to find some basic contract templates. The ‘copy and paste’ approach to contract drafting is not good enough for you or your business. When parties rely on a pre-built template agreement, they frequently run into problems. A proper contract is one that is customized to meet your specific agreement. Copy/paste language is often inapplicable and inadequate.

3. Signing an Agreement that You Do Not Fully Understand

Do not sign a business or employment contract unless you fully understand the terms. In far too many cases, people run into problems because they signed an agreement they simply did not understand. Before you finalize an agreement, take the time to carefully read it over. Pay close attention to all the specific terms.

4. Not Working with a Local Business Contract Lawyer

Contracts are complicated. You do not need to negotiate and draft an agreement alone. Professionals and business owners can benefit from the guidance of an experienced California business contract lawyer. Among other things, your business attorney will:

Understand your purpose and objectives
Review the specific terms and conditions of the agreement
Fix any ambiguities or errors in the contract, and
Negotiate any terms that are unfavorable

It is important to remember that business contracts are fundamentally negotiable. You have the right and ability to seek better terms. Do not finalize an agreement until you are satisfied with the contract.

Contact Our California Business Contract Attorney for Help

Attorney Lynette Ariathurai is an experienced, reliable contract lawyer. If you have any questions or concerns about business or employment contracts, our team can help. Contact us now for a completely confidential initial consultation. From our office in Fremont, we serve communities throughout the East Bay, including Hayward, Milpitas, Union City, San Leandro, and Newark.

business attorney, contract agreements, local contract attorney

Common Legal Documents Needed for a California Business

Starting a business in California has many complex requirements, including a wide variety of legal documents. As you decide on the appropriate structure for your business, you may need to file articles of incorporations or organization, and you will need to draft and execute contracts for commercial leases and for hiring employees. Yet business owners continue to require many kinds of legal documents while running a company, from purchase and lease contracts to new employee and client contracts. Attorney Lynnette Ariathurai regularly assists businesses in Northern California with the varied legal documents necessary to start and to run a business. Our firm wants to provide you with more information about some of the common legal documents needed for a California business.

Filing Documents to Get Your Business Started

Depending upon the type of business you are planning to start, you may be required to fill out and file certain legal documents with the state of California. If you are planning to form a limited liability company (LLC), for example, you will need to file Articles of Organization with the California Secretary of State. If you are planning to form a corporation, you will need to file Articles of Incorporation with the California Secretary of State. Before you file Articles of Organization or Articles of Incorporation, you will need to check that your business has a unique name that is not currently being used by a company in California.

Depending upon the size and type of business, you also may need to register a “Doing Business As” or DBA. To register a DBA, you may need to file a fictitious business name (FBN) statement with the County Clerk or Register-Recorded in the county where your business will be located. If your business will not be in California but will do business in California, you may need to register with the Clerk of Sacramento County.

Business Contracts in California

There are many different kinds of businesses in California, and the specific types of business contracts you will need to have in place will depend upon a variety of factors, including the type of business you are operating and the type of workers you will hire. In general, the following are common contracts that are used in California businesses:

Leasing contracts;
Employee contracts;
Equipment purchase and lease contracts;
Client contracts;
Sales contracts;
Warranties and extended warranties; and
Service contracts.

How a Fremont-area Business Lawyer Can Help

A local business lawyer can assist you with the different elements of drafting, reviewing, filing, and defending legal documents in a California business. When it comes to the documents you need to file to form your business, we can assist you in creating and filing those necessary materials. With business contracts, attorney Lynnette Ariathurai can assist you with the development of contracts and review of contracts your business receives, as well as subsequent issues like breach of contract claims.

Working with a local attorney can be much more beneficial to your business than an online service that offers legal document drafting and review since a local attorney will have experience working with businesses governed by California law and handling filings in the specific county where your business is located.

Contact a Business Law Attorney in the Fremont Area

If you are planning to start a new business, it is essential to work with an experienced California business law attorney who can assist you in drafting and filing the varied legal documents you will need to run a successful company. Attorney Lynnette Ariathurai has been assisting businesses in Northern California for years and can begin working with you today. Our firm regularly assists businesses and entrepreneurs in Fremont, Hayward, Union City, Milpitas, and Newark.

Contracts, documents, forms

How Proposition 22 Affects Independent Contractors in California

On November 4, 2020, California voters passed Proposition 22 (“Prop 22”), which CNN describes as a “costly and controversial ballot measure to exempt firms like Uber and Lyft from having to classify their gig workers in the state as employees rather than as independent contractors.” Numerous businesses that will benefit from Prop 22 supported the measure, including Uber, Lyft, DoorDash, Instacart, and Postmates. In total, those companies put $200 million into the ballot measure, according to CNN, making it the “costliest ballot measure in California’s history.”

What do California business owners need to know about Prop 22 and how it will affect independent contractors in California?

What is Prop 22?

Prop 22 was known more formally as the App-Based Drivers as Contractors and Labor Policies Initiative, and it was designed to allow companies operating in the gig economy to avoid the “ABC test” in California. The ABC test, also known as Assembly Bill 5 (AB-5), took effect on January 1, 2020. That recent law, as you may know, makes it more difficult for a gig economy company to classify a worker as an independent contractor as opposed to an employee.

According to the California Labor & Workforce Development Agency, an employer must treat a worker as an employee (and not as an independent contractor) unless the employer can satisfy prongs A, B, and C of the test. The ABC test meant that many Uber and Lyft drivers, for example, would need to be treated as employees as opposed to independent contractors.

With the passage of Prop 22, both ride-hail (i.e., Uber. Lyft) and delivery drivers can be exempt from the ABC test requirements in order to be classified as independent contractors. Prop 22 does provide some employee-like protections to gig economy drivers who will be classified as independent contractors, such as a minimum wage guarantee., overtime pay, access to workers’ compensation, union rights, family and sick leave, or employer related benefits.

Can My Independent Contractors Remain in this Classification?

Businesses that have independent contractors and that operate through an app platform should consult with an attorney about whether their independent contractors can remain independent contractors in light of the new law. Many businesses still have independent contractors and do not currently comply with AB-5. Under AB-5, most of those independent contractors should be classified as employees.

Prop 22, voted in by Californians, shows hope for the gig economy. Many people like to operate businesses for themselves and to use independent contractors to provide services in California. Gig economy business owners, as well as other business owners in California, will need to wait and see if the legislature makes changes to AB-5 in light of Prop 22.

Contact a California Business Law Attorney

Do you have questions about how Prop 22 will affect the classification of your business’s employees or independent contractors? An experienced California business law attorney can speak with you today. Attorney Lynnette Ariathurai has been serving the Northern California business community for years and can provide you with the information you need. Our firm serves clients in Fremont, Hayward, Union City, Milpitas, and Newark.

gig workers, independent contractors, prop 22

Avoiding Wrongful Termination Lawsuits

In the course of running a business, an employer can face many kinds of complaints from employees. As stressful and frustrating as this can be, you can go a long way towards reducing your liability risk with proper preparation. Among other things, you should be prepared for employee complaints and the possibility of wrongful termination allegations. Here, our California employer defense attorney highlights four steps that businesses and organizations can take to help avoid wrongful termination lawsuits, thereby saving the time, stress, and money associated with litigation.

Create Clear Grounds for Discipline and a Termination Policy

Your business or organization should have a clear policy in place regarding discipline and removal of employees. The termination policy should be clearly communicated to workers. Simply defined, a termination policy should set grounds for “discipline up to and including termination”. You should also get the termination policy down in writing. Although even a well-crafted termination policy cannot prevent every claim, an effective policy will help you avoid facing legal liability.

Set Expectations for Employees and Conduct Annual Performance Reviews

Every employee should understand what is expected from them in the workplace. Beyond ensuring that workers know what they need to do, it is imperative that your company conducts regular performance reviews. For most companies, an annual performance review is sufficient. To be clear, California law does not require annual performance appraisals.

Nonetheless, reviews are an excellent tool for employers because they can help the employee understand the workplace expectations and what they need to do to improve. Further, a performance review can serve as a form of documentary proof of an employee’s lacking performance and disciplinary issues should termination be necessary.

Caveat: Employers should beware of the fact that a performance review could potentially be used against them in a wrongful termination claim. If an employee has a history of glowing, positive reviews and is suddenly terminated, there may be a dispute.

Follow California’s Supervisor Training Requirements

Under California law, employers with 5 or more employees must provide 1 hour of sexual harassment and abusive conduct prevention training to nonsupervisory employees and 2 hours of sexual harassment and abusive conduct prevention training to supervisors and managers once every two years. The California Department of Fair Employment and Housing provides the required training free on their website. As a business owner, it is crucial that you make sure that all supervisors and all employees meet the state’s training requirements.

Follow State and Federal Employment Laws

Finally, employers should have a strong understanding of the federal and state laws designed to protect workers. This includes everything from the laws barring discrimination to laws protecting employees from unfair wage and hour law practices. Most federal and state employment laws also prohibit retaliation from an employer when the employee exercises their rights under the law.

Contact a Fremont, CA Business Law Attorney for Immediate Help

Attorney Lynette Ariathurai is a skilled, experienced advocate for clients. Our law firm will help you develop effective methods for responding to wrongful termination claims and defending against these claims in court.

If you have any questions about avoiding wrongful termination lawsuits, we are more than ready to help. Contact us today for a strictly confidential initial consultation. We represent employers in Fremont, CA and near Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara.

disputes, employees, running a business

Steps to Purchase a Business in California

Are you thinking about buying a business in California? While purchasing an existing business can be exciting, it can also come with complications. If you already own a business and are looking for a new acquisition, you might have a clear idea of the type of business you want to buy. However, if you are just starting out, you should seek advice about choosing the best business in which to invest. You will also want to consider due diligence, and all the steps you will need to take to ensure that you do not end up buying a business that will cause significant problems in the long run. By working with an experienced business law attorney throughout the process, you can feel secure in knowing that you have legal representation to help minimize the risks and to guide you through the business buying process.

When you are considering a business purchase or acquisition, you should consider the following steps.

1. Decide on a Business You Want to Buy

Once you know you want to invest in a new business, the process of identifying the best company can be complicated. For anyone who is seeking to acquire a second (or third, or fourth) company, the process might be a bit easier—you already know your own strengths as a business owner, and you know the industries in which you feel comfortable doing business. If you are new to the business world, you should work with a lawyer who can help you to determine the types of industries that meet your needs, and the specific businesses that you may be interested in purchasing given your previous experience and industry knowledge.

2. Consider Your Financing Options

Most business purchasers need to secure financing to buy a business. Whether you have been involved in a specific industry for years or you are just starting out, your business law attorney can help you to determine the type and amount of financing you might be able to access.

3. Draft an Agreement to Buy the Business

Once you know the business you want to purchase and have a good sense of your financing options, you will work with your lawyer to draft a purchase agreement. The purchase agreement does not bind you to the purchase if there are significant legal issues—uncovering any financial or legal problems with the business can result in the purchase agreement being voided. How will you determine whether there are any major issues that need to be resolved? That is what the next step is for: due diligence.

4. Do Your Due Diligence

According to Score.org and the U.S. Small Business Administration (SBA), doing due diligence is how you will learn about any potential legal or financial problems with the business you want to buy. In performing due diligence, you can ask for a wide variety of materials related to the business, including financial documents, contracts, business equipment, assets, trade secrets, and other intellectual property. This step is also when you will make difficult inquiries about current legal obligations, and any potential legal obligations in the future. Before you buy a business, you need to have clarity about liens, judgments, licenses, permits, zoning issues, debts, and any pending lawsuits.

Your business lawyer will play an important role in the due diligence process and can help you to assess the types of risks you are facing in buying the business. Attorney Lynnette Ariathurai can determine whether the risks and liabilities linked to the business are acceptable and can clarify your options for minimizing future risks if you move forward with the purchase.

5. Closing

If you decide to move forward with the business purchase, you will work with your business lawyer to take all necessary legal steps prior to the closing, at which point you will review and sign the purchase agreement, along with any financial documents.

Contact a Business Lawyer When Buying a Business

Do you have questions about buying a business, or do you need representation for a specific business purchase? Our law firm can assist you from start to finish when it comes to purchasing a business in California. Contact attorney Lynnette Ariathurai today to get started. We support businesses legal needs in the East Bay area including Fremont, Newark, Hayward, Milpitas, and Union City.

business attorney, business law attorney, buying a business, California business law, purchase a California business, purchasing a business

Attorney for Buying a Business

Lynnette Ariathurai, Bay Area Business Attorney

If you are considering a purchase of an existing business, it is important to work with an attorney for buying a business. Purchasing a business can be a complex process, and many legal issues can arise in the process of looking for a business to buy, securing financing for the purchase, and getting the business running again. If you are in the market for a business, you should know that an experienced Fremont business lawyer can provide you with the services you need. As you consider your options for buying a business, the following are issues and concerns that you should consider.

Looking for a Business to Buy: Selection and Marketplace

Seeking out a business to buy can be a complicated process in and of itself. How do you select the type of business to buy? Generally speaking, you should seek out businesses that have ties to your own professional work and expertise. If you do not have experience in a particular industry, buying a business in that field can be much more difficult than buying a business in a field with which you have some familiarity.

Once you decide on the type of business you should be selecting, it will be time to locate the business that you want to purchase. You should work with a lawyer to understand the marketplace and your options for selecting an appropriate business.

Due Diligence Prior to Purchasing a Business

Prior to buying, you should develop a due diligence checklist that includes a variety of tasks you will need to complete with assistance from an experienced business law attorney.

You will also need to secure financing for the purchase. In order to secure financing, you will need to provide a significant amount of information to the lender about the business, which you will gather in the process of conducting due diligence. An article in Reuters discusses key elements of due diligence. Generally speaking, due diligence should include the following for most types of business purchases:

Researching the business’s financial information, including any existing liens, debts, tax returns, expenses, profit margins, and inventory;
Gather information about the structure of the business and the business formation of the company, which will provide you with information about the business’s bylaws or articles of incorporation, shareholders or investors, and compliance filings;
Determine the business’s assets, including commercial real estate, equipment, furniture, and products;
Learn about existing employee and customer data, including any existing disputes or litigation;
Review existing business contracts, including employment contracts, restrictive covenants, mortgages, leases, stock purchase agreements, and existing agreements with suppliers or vendors;
Determine whether there are any existing legal issues or disputes involving the business; and
Investigate existing intellectual property, such as existing trademarks or service marks.

Guidance on Liability and Minimization of Risk

If you or your company is considering purchasing a business, it is imperative that you carefully assess all of the potential risks. The absolute last thing you want to deal with is an unanticipated issue that could expose you to legal liability. Among other things, these debts could include employee wages, contractual obligations, loans, state or federal taxes, commercial leases, and other financial responsibilities.

Hiring a Knowledgeable Business Attorney is Important

Given extensive experience practicing business law, your attorney will review all relevant purchase documents, offer guidance on liability, and help you minimize the risks. It may be important to send a bulk sale notice to all affected creditors, including state and federal tax authorities. By doing so, you will notify creditors that assets are being transferred and impose a time limit for them to bring any claim. A well-drafted asset purchase agreement will help to ensure that your company is not subject to unknown liabilities.

With a full understanding of the risks as presented by your business attorney, you and your business partners can better protect your financial interests. In some cases, it may be advisable to buy the company’s individual assets instead of the entire business. In other cases, purchasing an ownership stake in the company may be the best path forward. There are additional ways to obtain protection in a purchase, such as temporarily holding back a portion of the purchase price, including comprehensive indemnification provisions, and obtaining insurance.

Business Law Matters After Your Purchase

Depending upon the type of business you bought, it may be necessary to change the business structure, and you may need legal assistance with business formation questions. New businesses, and new business owners, will also need to draft enforceable contracts for employees, vendors, suppliers, and other parties. Business contracts can be complex, and you should always work with an experienced business lawyer who can ensure that your contracts are likely to be enforceable in the event of a dispute.

The attorney you hire for buying a business can also assist with other outstanding legal items that are likely to arise in the early stages of buying a business.

Contact a Business Lawyer in Fremont

Buying a business can be a complex endeavor, but an experienced California business and corporate attorney can assist you. At The Law Office of Lynnette Ariathurai, we serve clients in Fremont, Hayward, Union City, Milpitas, and Newark, California. Contact attorney Lynnette Ariathurai today for assistance with buying a business.

business attorney, business law attorney, buying a business, purchase a business, purchasing a business

Hiring Employees vs. Independent Contractors

When you are hiring new people to work for your business, it is essential to have clarification about whether you are hiring employees or independent contractors. The distinction between employees and independent contractors is important for your own business purposes, as well as for the worker. As you may know, employees have certain rights that independent contractors do not have, and accordingly, Bay Area employers have certain obligations to employees that they do not have to independent contractors.

There is a new law in California that clarifies the test an employer should use for determining whether a worker is an employee or independent contractor. You should seek advice from our Fremont area business law attorney to determine what you must do to comply with the law concerning employees and independent contractors.

California’s ABC Test

Assembly Bill 5 (AB 5) took effect on January 1, 2020. The new law replaces the common law test for determining whether a worker is an independent contractor or an employee. Under the new law, you must classify workers as employees—and not as independent contractors—unless your worker meets all the following conditions of the ABC test:

A: The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
B: The person performs the work that is outside the usual course of the hiring entity’s business; and
C: The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

To be clear, your workers will be considered employees unless you can prove, based on the elements of the ABC test above, that they should be classified as independent contractors.

Business Exemptions for the ABC Test

Some businesses are exempt and do not need to take the test. In total, there are seven categories of exemptions. Determining whether your business meets the exemption requirements can be complicated. One important note is that if your business is determined exempt from this ABC test, it would then fall under the previous case law for determining whether a person is an employee or independent contractor. Our firm can help you to determine whether you fall under one of the exemptions and, either way, we may be able to provide advice on restructuring your business if it is possible.

Contact a Fremont Business Law Attorney

When you are hiring new workers for your business, you must have clarification about each worker’s classification. The new “ABC test” in California for determining a worker’s classification as an independent contractor or employee can be confusing, but an experienced business law attorney can help you. Contact the law office of Lynnette Ariathurai online or call our firm at 510-794-9290. We serve businesses throughout Fremont, Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara, CA.

ABC test, business law attorney, California worker classification, hiring contractors, hiring employees

Two Things to Consider When Starting a Software Company

Starting a software company is an exciting enterprise. Tech folklore is full of stories of people building billion-dollar companies from ideas that were generated in their parents’ garage. The stakes are high. Successful ideas have made some people very rich. Poorly executed ideas have left other people in debt with unsurmountable financial losses.

corporate entity, employee compensation, independent contractors, software start-up, start a business

Why Select an LLC as a Business Entity?

Choosing the best legal structure for your business requires knowledge of your line of work and an understanding of local, state, and federal laws. Tax laws are constantly changing and the need for capital is always present, so it is crucial for business owners to evaluate which business structure offers the advantages that will save them money and help them grow. Limited liability corporations (LLC), are one of the most popular business forms for a variety of reasons including:

business planning, laws, structure

Selecting the Right Business Entity When Starting a Business

One of the most important choices you will make when starting a business is selecting a type of legal structure for your company. This decision impacts how much you pay in taxes, the amount of paperwork your business is required to complete, your personal liability, and your ability to raise money to expand or grow.

There are three primary factors that will guide the type of business entity you choose — liability, taxation, and record-keeping. Choosing the correct business entity should be a thoughtful decision. Weigh the pros and cons of each and explore how such an entity can help your business launch, expand, and grow. Business entities are not written in stone and you may change yours as circumstances dictate.

The four most common business entities and what distinguishes them follow:

A sole proprietorship offers complete managerial control to the owner. As the owner you are also personally liable for all the financial obligations of your business. Of all the business entities, a sole proprietorship is the riskiest, placing your business and personal wealth in play when the business cannot pay its financial obligations.
A partnership is a business of two or more people who agree to share in the profits and losses of a business. Like sole proprietorships, each partner is personally liable for all the financial obligations of the business, jointly and separately.
A corporation is a legal entity that is separate and apart from the owners who created it. The corporation can make a profit, is taxed, and can be held legally liable for its actions. The owner’s liability for the financial obligations of the corporation are limited to the value of the shares the owners have in the corporation. Corporations are the most expensive business entity to form and maintain and have extensive record-keeping requirements.
A limited liability company (LLC), is a hybrid of a corporation and partnership business entity. Owners are only liable for their “shares” in the LLC and profits and losses are passed through to the owners individually without taxation of the business entity itself.

Set Up your Business, Register, and Comply with Record-Keeping Requirements

You should seek expert advice from a business attorney when considering the pros and cons of various business entities, the registration requirements in your locality, and the ongoing record-keeping requirements your business must follow at its formation and beyond.

If you are an aspiring business owner or entrepreneur, we can help you turn your ideas into actions and select the right business entity for your new business. Our experienced business attorneys can partner with you to build a lasting relationship that is mutually beneficial. Contact us today for an initial consultation. Located in Fremont, CA, we serve Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose and Santa Clara. We look forward to putting our legal experience to work for you.

business attorney, business entity, legal business structure, record keeping requirements