Hartnett Law Group

May 2, 2012

BE CAREFUL WHAT YOU ASK FOR, YOU MIGHT JUST GET IT AND MORE: HOW A SUBCONTRACTOR INDEMNITY AGREEMENT CAN SUBJECT THE GENERAL CONTRACTOR TO ATTORNEY’S FEES

Toro Enterprises, Inc. v. Pavement Recycling Systems, Inc.

As most subcontractors know, their contract with the general contractor of a project is going to include an indemnity provision, an attorneys’ fees clause, and a clause incorporating the prime contract. While these types of clauses are almost always included the actual contractual language will vary and can give you more or less rights. As the general contractor in Toro Enterprises, Inc. v. Pavement Recycling Systems, Inc. recently found out, the various clauses in a subcontract will be construed collectively and based on the words actually used. Despite this general contractor seeking indemnity from its subcontractor, it became liable for its subcontractors attorneys’ fees.

In Toro Enterprises, Toro, as the general contractor, and Pavement, as the subcontractor, performed roadway construction for the City of Oxnard. The Plaintiff, Haffiza Ali was in an automobile accident near the construction and sued Toro. Toro then cross-complained against Pavement seeking indemnity under the subcontract. On a motion for summary judgment, a judgment was entered in favor of Pavement on both the complaint of Ali and the cross-complaint of Toro: Pavement was deemed the prevailing party. Pavement then moved for an award of attorneys’ fees under the subcontract.

The Court of Appeals for the Second District held that the general contractor Toro was in fact liable for the attorneys’ fees of its subcontractor Pavement despite the indemnity provision and the attorney’s fees clause appearing in separate sections of the Subcontractor Agreement: the sections did not compete but could be read together.

The key to Pavement’s success here is in the language of the contract, particularly the attorney’s fees clause.

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April 25, 2012

LICENSING YOUR LLC WITH THE CSLB: PITFALLS TO AVOID

As most contractors are aware by now the California Contractors State License Board (CSLB) began licensing limited liability companies as of January 1 this year. Unfortunately, based on faulty applications only five LLCs received license status since January 1, 2012.

In its Winter/Spring 2012 newsletter, the CSLB reminds contractors of the necessary information needed to obtain a license for an LLC. While the focus is on the LLC, because of its new status, the same recommendations hold true for any business form seeking a contractor’s license.

The most important thing to remember when seeking a contractor’s license is that you must be licensed prior to contracting under that entities name, particularly for a new entity. Contracting without a license is subject to severe penalties. Again, the entity that is contracting must have a valid contractor’s license.

The rejection rate for LLC applications is approximately 85% of all applications received. The two reasons most LLC applications get rejected are: 1) the application is missing the Secretary of State registration number, and 2) the names and personnel listed with the Secretary of State are inconsistent with the records. The Secretary of State information needs to be consistent with the application and the information provided to the CSLB.

To obtain a contractor’s license for an LLC or a new business entity it is a two-step process. First, the company must be formed and registered with the Secretary of State. Once the registration with the Secretary of State is complete, the company may seek its license from the CSLB. As stated above, from the time the company is formed to the time it is licensed, the company cannot contract for or conduct any business that requires a contractor’s license.

The CSLB is taking licensure seriously and has conducted various stings across California this Spring netting 110 notices to appear. If you have any questions about forming a business in California or regarding your licensure, do not hesitate to contact the Hartnett Law Group.

To access the CSLB’s Winter/Spring 2012 Newsletter click here.

Cordially,

Jessica L. Jasper, Esq.

HARTNETT LAW GROUP

714.738.1156 ext. 220

This post and all information contained herein is subject to the Hartnett Law Group Disclaimer

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Filed under: LLC Licensing Contractors State License Board CSLB Contractor

April 16, 2012

There’s No Such Thing As A Free Lunch: California Supreme Court Determines that Employers Can’t Force Employees to Eat Lunch

SIGNIFICANT CALIFORNIA SUPREME COURT DECISION EFFECTING EMPLOYEE RIGHTS AND EMPLOYERS’ OBLIGATIONS FINALLY DECIDED

Are You Providing Your Employees The Rest And Meal Periods Required By Law?
Employers Finally Given Some Guidance on Meal and Rest Breaks

Brinker Restaurant Corp. v. Superior Court

Twelve years ago, in 2000, the State Legislature and the Industrial Welfare Commission (“IWC”) adopted monetary remedies for a denial of meal and rest breaks including the imposition of a “premium” wage.

Unfortunately, for many employers, the IWC did not give clear guidance to employers regarding the implementation of the meal break and rest breaks periods. Notwithstanding the terrible economy and “anti-business” environment in California, the remaining employers in California were hit with a substantial amount of class action litigation and “wage and hour” litigation regarding the implementation of the IWC rules. Many employers were faced with the dilemma that if you provide the employee with break time, can you force that employee to take the break, or can you force him/her to take a lunch if it is their free time?

Last Thursday, April 12, 2012, the Supreme Court of California handed down the highly anticipated decision in Brinker Restaurant Corp. v. Superior Court wherein the Supreme Court interpreted wage and hour laws regarding rest and meal periods. In Brinker, the Supreme Court held that the employer is required to provide the rest and meal breaks but the employer is not required to ensure the employee takes the break or ceases all work.

To assist you, as an employer or employee, to ensure that the law is being followed, the Court’s ruling is broken down below, with the link to the full case provided below:

REST BREAKS (Paid)

- Employees are entitled to rest breaks as follows:

10 minutes for a shift lasting between 3.5 hours and 6 hours
20 minutes for a shift lasting over 6 hours up to 10 hours
30 minutes for a shift lasting over 10 hours up to 14 hours

- “Insofar as practicable” the rest breaks should occur in the middle of work periods

- The Court held, “In the context of an eight-hour shift, “as a general matter,” one rest break should fall on either side of the meal break.

- The Court further held, “An employer is required to authorize and permit the amount of rest break time called for under the wage order for its industry.”

MEAL BREAKS (Unpaid)

- “An employer must relieve the employee of all duty for the designated period, but need not ensure that the employee does no work.”

- An “off-duty” meal period must include:

An uninterrupted 30 minute period;
The employee being relieved of all duty; and
The employee being permitted to leave the premises.

- An employer satisfies its obligation if it:

Relieves its employees of all duty;
Relinquishes control over all activity;
Permits them a reasonable opportunity to take an uninterrupted 30-minute break;
And does not impede or discourage the employee from doing so.

- The Court stated, “Employers must afford employees uninterrupted half-hour periods in which they are relieved of any duty or employer control and are free to come and go as they please.”

- If the employer has provided the designated meal break but the employee continues work, the employer is not liable for “premium” pay but it is liable for straight pay, including overtime. This is true if the employer knew or reasonably should have known that the employee was working through the authorized meal period.

- Timing of the meal break:

First 30-minute meal break must be provided no later than the end of the 5th hour of work, unless the total shift is 6 hours or less and then the employer and employee can mutually waive the meal period.
Second 30-minutes meal break must be provided no later than the end of the 10th hour of work.
The Court held that IWC Wage Order No. 5 does not impose any additional timing requirements.

As an employer, it is your responsibility to provide the rest period and meal breaks for your employees. To make your employees aware of your company’s policy regarding breaks you may remind them to take their break and/or state in your employee handbook when breaks are allowed. If, however, the rest and meal breaks are provided to the employees, it is their responsibility to take them.

For the full text of Brinker Restaurant Corp. v. Superior Court please click here.

If you have any questions regarding your company’s policy, please do not hesitate to contact the Hartnett Law Group. You may wish to update your employee /personnel manuals to provide for the clarification of the IWC orders provided by the Supreme Court in Brinker.

Cordially,

THE HARTNETT LAW GROUP

PATRICK M. HARTNETT
PHartnett@HartnettLawCenter.com

MEGHAN E. GEORGE
MGeorge@HartnettLawCenter.com

JESSICA L. JASPER
JJasper@HartnettLawCenter.com

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Filed under: Brinker Law Hartnett Law Group Patrick Hartnett Meal Breaks Rest Breaks Lunch

March 29, 2012

Tax Time Corporate Documentation

We at the Hartnett Law Group have previously sent corporate housekeeping reminders and tips periodically to assist our small business clients in making sure that precautions are taken to protect your personal and corporate liability. As tax time approaches, and companies engage in corporate “housekeeping,” we would like to take this opportunity to remind you of the importance of complying with corporate formalities once again.

Unfortunately statistics show, many small to medium-sized businesses (under $250M) fail to follow corporate formalities, which may lead to the corporate veil being pierced, and personal liability being affected.

In order to help avoid potential liability and to assist in complying with corporate formalities we have created the following checklist. Please Click Here to view Hartnett Law Group’s Corporate Formalities Checklist.

Recently, Courts have found a number of reasons to “pierce the corporate veil.” Piercing the corporate veil simply means that if a corporation does not properly observe the corporate formalities that must be followed by each corporate entity, the individuals running the corporation may become personally liable for the acts of the corporation. Court’s have pierced the corporate veil for failure to do the following:

· Hold an annual meeting

· Keep corporate minutes in the corporate record book

· Holding special meetings of the board of directors, when necessary

· Follow the correct procedures when entering into contracts with the Corporation

· Keep accurate financial records

· Do not give personal guarantees

· Issue stock

· File Statement of Information annually

· Comply with corporate documents

When was the last time you checked your corporate record book to ensure that you were complying with the state’s requirements? For more detailed explanation of the above checklist, please Click Here to visit the Hartnett Law Group Resource Center, located on our website.

If you would like to speak to an attorney with any questions or comments, please do not hesitate to contact one of the following:

Patrick M. Hartnett
phartnett@hartnettlawcenter.com
714.738.1156 Ext. 210

Jessica L. Jasper
jjasper@hartnettlawcenter.com
714.738.1156 Ext. 220

Meghan E. George
mgeorge@hartnettlawcenter.com
714.738.1156 Ext. 213

Cordially,

MEG

Meghan E. George, Esq.

HARTNETT LAW GROUP

“Business Law for the Business Person”

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Filed under: tax 2011 corporate documentation 2011 taxes corporate formalitites

March 27, 2012

March 27 eLegalBrief: California Secretary of State Recognizes Two New Subtypes of Corporations: Flexible Purpose and Benefit Corporations

CALIFORNIA SECRETARY OF STATE RECOGNIZES TWO NEW SUBTYPES OF CORPORATIONS: FLEXIBLE PURPOSE AND BENEFIT CORPORATIONS

            Beginning on January 1, 2012, the California Secretary of State began to recognize two new subtypes of stock corporations: the flexible purpose corporation and the benefit corporation. The two new subtypes allow corporations and their directors to not only consider the financial impact on its shareholders in making business decisions but to consider non-financial impacts of these business decisions.

            To form a flexible purpose corporation or a benefit corporation, free-form Articles of Incorporation must be drafted in compliance with the specified laws of the California Corporations Code. The filing fee, as with other general stock corporations, is $100. In the Articles of Incorporation a flexible purpose corporation must state the enumerated purposes and/or profession in which the business will engage, along with a statement that the corporation will engage in one or more charitable or public benefits. Corp. Code § 2602. For the benefit corporation, it must identify any specific public benefit the corporation will adopt or state that it is for the general public benefit. Corp. Code § 14610.

            California is the first state to adopt the flexible purpose corporation. The flexible purpose corporation creates a hybrid corporation whose responsibilities differ from a purely for-profit corporation whose purpose is to pursue profit and from a non-profit corporation whose purpose is to solely promote social benefits. The flexible purpose corporation allows a corporation to adopt a special purpose such as promoting a positive effect on the community or minimizing adverse impacts on society or the environment. In doing so, the directors of the corporation are protected for decision making involving competing interests between profitability and the special purpose.

            California joins six other states in adopting the benefit corporation. The benefit corporation specifies that the corporation and directors must evaluate the impact on the workforce, the community, and the environment when conducting business and making business decisions. Benefit corporations are required to have: 1) Purpose to create a positive impact on society and the environment; 2) Accountability by expanding the fiduciary duty to require consideration of the impact on the workforce, community, and environment; and 3)Transparency through public reporting of the social and environmental performance of the corporation. Corp. Code § 14600 et seq.

            For more information about these corporation subtypes, the rights and responsibilities of corporations, or for assistance in forming a corporation, please do not hesitate to contact the Hartnett Law Group.

COMPLIANCE WITH THE ADA STANDARDS FOR ACCESSIBLE DESIGN

On March 15, 2012, all public swimming pools were required to meet the new ADA standards for accessibility. Every public pool must have at least two means of access unless it is under 300 linear feet and in those cases it must have one means of access. The designated means of access include one or more of the following: 1) pool lifts, 2) sloped entries, 3) transfer walls, 4) transfer systems, or 5) accessible pool stairs with one of the means of entry being either a pool lift or sloped entry. These requirements also apply to wading pools that must have a sloped entry and spas that must have a lift, a transfer wall, or a transfer system. The specific requirements for swimming pools, wading pools and spas can be found in Chapter 2, Section 242 of the 2010 ADA Standards for Accessible Design. Further, the designated means of access must comply with Chapter 10, Section 1009 of the 2010 ADA Standards for Accessible Design. While some exceptions may apply such as preservation of a historic facility or undue hardship, the exception standards are difficult to meet. Finally, unlike other ADA guidelines, these requirements are mandatory and all public swimming pools must be upgraded to meet these standards. If you have any questions regarding the new ADA standards or want to know whether your pool must meet these standards, please do not hesitate to contact the Hartnett Law Group.

Cordially,

Jessica L. Jasper, Esq.
HARTNETT LAW GROUP
(714) 738-1156 ext. 220

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Filed under: Corporations California secretary of state ADA

March 25, 2012

Company Overview

Welcome to the Hartnett Law Group where our maxim is “Business Law for the Business Person”. We have experience representing a variety of clients in and around North Orange County for the past 25 years as business trial lawyers in matters ranging from Employment Law to Construction Law to Real Estate matters. We also represent clients in transactional matters such as business formation, business dissolution, and contract drafting and review. In these tough economic times we pride ourselves on reaching a favorable conclusion to your matter in a cost effective and efficient manner while zealously advocating on your behalf.

In an effort to provide this quality service and strength communication with our clients and potential clients, without disrupting your busy schedule, we stay up to date on the latest technology and offer initial client interviews and consultations over Skype, iChat, and other video conferencing platforms. If you would like to know more about us, please peruse the website or contact us and be sure to check out our Blog and eLegalBriefs.

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March 13, 2012

Hartnett Law Group

“Business Law for the Business Person”

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March 13, 2012

March eLegalBrief

We at the Hartnett Law Group strive, as always, to keep you informed of the latest in court decisions that can affect your business and your affairs. Today’s eLegalBrief focuses on two holdings in particular which affect contractors and small business owners alike. If you have any questions please do not hesitate to contact the Hartnett Law Group. Please visit our website at www.hartnettlawcenter.com for continuing updates, news, and for contact information.

Labor Board Sides With Workers On Joint Arbitration Case

In a significant decision that applies to both unionized and non-unionized workforces, the NLRB recently held in D.R. Horton, Inc. that an employer violates the National Labor Relations Act (NLRA) when it requires, as a condition of employment, employees covered by the NLRA to sign an arbitration agreement that precludes them from filing joint, class or collective actions asserting employment-related claims either in court or before an arbitrator.

This decision will no doubt anger many companies, as the Labor Board concluded that federal laws protecting workers rights to engage in concerted action trumps any arbitration agreement that bars them from bringing group claims. The ruling applies to non-management private sector workers, union and nonunion, from low-wage restaurant workers to well-paid employees on Wall Street.

Mandatory arbitration agreements are very widespread in the business world. Yet now, pursuant to this holding, it is found to be a violation of labor law if that agreement bars class action lawsuits. Experts speculate that there will be much uprising over this issue in the business sphere because labor law is being uniformly applied in a non-unionized setting. It is highly likely this decision, as a result of this, will be applied to a federal court of appeals. The board noted, in its decision, that it was not banning agreements that required arbitration as a way to resolve disputes, only those agreements that banned class action lawsuits.

See Steven Greenhouse, “Labor Board Backs Workers On Joint Arbitration Cases”, New York Times, January 6, 2012.

What To Do If The Owner Is Bankrupt?

In a recently published appellate opinion, it has been held that the recording of a mechanic’s lien against a property owned by a party in bankruptcy is permissible and does not violate the bankruptcy stay. The Court held that, as most people are aware, the filing of a bankruptcy petition operates as an automatic stay of the commencement or continuation of any legal action against the bankrupt debtor. A mechanic’s lien claimant can record a mechanic’s lien after the property owner files for bankruptcy without violating the automatic stay. The mechanic’s lien or must file a notice of lien in the debtor’s bankruptcy proceedings to inform he debtor of the recording of the mechanic’s lien and its intention to enforce the lien. The time for filing a lawsuit to foreclose the mechanic’s lien is stayed during bankruptcy but is preserved so long as the real property remains the property of the bankruptcy estate. Thus, if you are faced with a situation in which the owner of the property is in bankruptcy, which is an all too familiar course in today’s rough economic times, the contractor is not without a course of action. If you have any questions, or wish for legal assistance or advice in filing your mechanic’s lien cause of action, please do not hesitate to contact the Hartnett Law Group.

Cordially,

Meghan E. George, Esq.

HARTNETT LAW GROUP

(714) 738-1156 x. 213

This post and all information contained herein is subject to the Hartnett Law Group Disclaimer

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Filed under: labor workers union nonunion arbitration

January 5, 2012

January eLegalBrief

Happy New Year to all! We at the Hartnett Law Group have made the resolution to keep you as apprised as possible to all new laws and changes that will go into effect in 2012. As part of that ongoing resolution, we have gathered a summary of changes in the law that may affect you and your business as they go into effect in 2012. Probably most significantly, a new California law, SB 459, went into effect on January 1, 2012. SB 459 is likely the most important and significant legislation for any California employer to be aware of this year. and is probably the most significant piece of new employment-related legislation for. SB 459, in short, states that the “willful” misclassification of independent contractors will become in and of itself an unlawful act that will subject an employer to fines of $5,000 to $25,000 for each violation as well as other significant disciplinary action.

Please see below for a short synopsis of other laws that will go into effect in 2012. For more information, please see our blog, which will contain a more detailed analysis of various new legislation.

· Limited Liability Companies are now able to apply for contractor licenses in California, in compliance with Senate Bill 392. LLC officers interested in obtaining a contractor license must fill out a form specific to LLCs to initiate the process. That form is now available on the CSLB website. You can visit the CSLB website at http://www.cslb.ca.gov/.

· Assembly Bill 397 requires a contractor who certifies that he/she has no employees and is exempt from carrying a workers’ compensation policy to submit a new certification, or proof of workers’ compensation insurance coverage or self-insurance, each time the license is up for renewal. ( Please note: C-39 Roofing contractors must still purchase workers’ compensation insurance coverage even if they certify they have no employees, as required by Business and Professions Code section 7125)

· Assembly Bill 551 increases the fines for contractors who fail to pay prevailing wage on public works projects and for failure to provide certified payroll records in a timely fashion. It also requires the Labor Commissioner to notify CSLB when it updates its lists for these violations, and to annually notify awarding bodies of the availability of debarred contractors.

· Assembly Bill 766, a companion to Assembly Bill 551, requires that certified copies of the payroll records be made available to members of the Joint Enforcement Strike Force on the Underground Economy or other law enforcement on request. If such records are requested by the public, information on the employees would not be included.

· Assembly Bill 1307 states that CSLB may discipline a license for failure to resolve outstanding final liabilities assessed by the Board of Equalization, in addition to the current disciplinary laws coordinated between CSLB and the Franchise Tax Board, Employment Development Department, and Department of Industrial Relations.

· Assembly Bill 1424 requires CSLB to state on its applications that the law allows the Board of Equalization and Franchise Tax Board to share information with CSLB and that a license may be suspended for failure to pay state taxes.

· As of July 1, 2012: Senate Bill 190 makes technical changes to the mechanic’s lien overhaul legislation passed last year (SB 189) that is to take effect on July 1, 2012. Please see our blog for ongoing information and changes with respect to SB 189.

· Senate Bill 424 allows a design professional lien to be converted to a mechanic’s lien if the design professional lien expires, and remains partially or fully unpaid.

· Assembly Bill 456 makes clear that the proof of service affidavit that must accompany a mechanic’s lien filing to validate the lien must show the name of the property owner and the title or capacity in which the person or entity was served the claim of lien.

· Senate Bill 341 requires that construction vehicles with a gross vehicle weight rating of 14,000 pounds or more be equipped an automatic backup alarm audible from 200 feet under normal conditions.

· Senate Bill 221 increases the jurisdiction for small claims court from $7,500 to $10,000.

· Assembly Bill 1091 requires that CSLB be notified within 90 days of a Responsible Managing Officer’s (RMO) or Employee’s (RME) disassociation from the license. The bill also enables a 90-day extension in limited circumstances to replace the qualifier for the license.

If you have any questions or would like a more detailed analysis of the above changes in the law, please do not hesitate to visit our blog for more information. The above information was obtained, and is available, from the Contractors State License Board website at http://www.cslb.ca.gov/. If we can be of any assistance to you in 2012, as always, please feel free to contact us at the Hartnett Law Group.

Cordially,

MEG

Meghan E. George, Esq.

Hartnett Law Group

To see the full eLegalBrief Click Here.

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Filed under: SB189 mechanics lien

January 3, 2012

AB1X Upheld as Constitutional, which will Put an End to the 400 Community Redevelopment Agencies Across the State and the 12% Property Tax that is Currently Allocated to Them in an Effort to Curb the Projected $25 Billion Operating Deficit of California.

On December 29, 2011, the Supreme Court of California handed down a decision California Redevelopment Association, et al. v. Ana Matosantos, et al., that upholds Assembly Bill 1X 26, which eliminates Community Redevelopment Agencies. This decision and the corresponding legislation changes the way cities and communities finance redevelopment and real estate projects.

For a synopsis of the decision and a brief history of redevelopment agencies click here.

For the full decision of California Redevelopment Association, et al. v. Ana Matosantos, et al., click here.

Cordially,

Jessica L. Jasper

HARTNETT LAW GROUP

714.738.1156 x. 220

This post and all information contained herein is subject to the Hartnett Law Group Disclaimer