New Consequences for Misclassification of Independent Contractors

California has severely increased the penalties for misclassification of employees as independent contractors. All business owners who hire independent contractors need to pay attention to this change in the law.

The following is from the California State Bar's Corporation's Committee of the Business Law Section.

As of January 1, 2012, the State of California enacted legislation imposing heightened penalties on employers that misclassify employees as independent contractors. SB 459 added Sections 226.8 and 2753 to the California Labor Code. As a result, California now imposes a civil penalty ranging from $5,000 to $15,000 for each willful violation and from $10,000 to $25,000 where the employer has engaged in a “pattern or practice” of willful misclassification, in each case in addition to back pay and wages owed to misclassified workers. Under California Labor Code §226.8(a)(1), a willful misclassification is one that is “voluntary and knowing.”

In addition to the heightened monetary penalties, the new law also requires any employer found to have violated the law to place a notice on such employer’s website for one year, accessible to both employees and the general public, containing a statement that: (a) the employer has committed a serious violation of the law by willfully misclassifying employees; (b) the employer has changed its business practices to prevent future violations; (c) any employee who believes he or she is misclassified may contact the California Labor and Workforce Development Agency at the mailing address, e-mail address, or telephone number of the agency, as provided in the notice; and (d) notice is being posted pursuant to a state order.

Note also that under Section 2753, a person who, for money or other consideration, knowingly advises an employer to treat an individual as an independent contractor to avoid employee status for that individual shall be jointly and severally liable with the employer if the individual is found not to be an independent contractor. The foregoing does not apply to persons providing advice to their employers or attorneys authorized to practice law in California or another United States jurisdiction who provide legal advice in the course of the practice of law.

December 2011 Newsletter

We just published a newsletter with articles on year end to do items, social media issues and estate planning.
December 2011 Morton Memo

New Services Offered

My firm has expanded. I recently brought on board attorneys Kellie M. Delaney and Michael H. Ritter. Kellie is a relatively new attorney but has a great deal of experience in civil litigation, business and corporate governance. Mike is an experienced attorney in estate planning and telecommunications.

Mike and Kellie are not only fine attorneys but are very experienced in the business world.  They bring a more practical business sensibility in their approach to our clients' issues. 

Mike and Kellie will add considerable depth to the Law Offices of Eric D. Morton. We will provide greater services in the fields of real estate, litigation, estate planning and telecommunications. In addition, we are experimenting with ways to revolutionize the practice of law through technology and close collaboration with other attorneys and professionals.

Check out our website and our new practice fields.

Estate Planning

Litigation

Real Estate

Telecommunications

As always, we are dedicated to providing our clients with responsive, quality and cost-effective legal service.   

True Stories: IP registrations work

In the past week, I wrote demand letters for two clients whose intellectual property rights were being violated.  We received instant and complete success in both cases.

In one instance, a former employee was using my client's copyright protected materials.  I sent the former employee a demand letter to cease and desist, to destroy all materials in her possession and send us list of all such materials and a list of all persons to whom she distributed the materials.  The former employee complied with our demands, completely, within two hours. 

In the other case, I wrote a demand letter to a company that was offering a service that was identical to my client's service and was doing so under a brand name that was so close to my client's service name that it constituted infringement.  The other company's CFO called me immediately after receiving my letter and told me that they would stop using the infringing name.

The key in both cases was registration.  In the first instance, I trained my client to register its copyrights and the client did so.  The former employee could have been sued for violating the Digital Millennium Copyright Act and faced enormous exposure to a court award of damages and attorneys fees.

In the second instance, my client had a Federal trademark registration for its name.  The infringing company faced great exposure to a suit for bad faith infringement.

Over the years, I have urged my clients to register their copyrights and trademarks.  Having such a registration gives a tremendous advantage to the owner of such intellectual property.  These cases show the leverage that the owner of a copyright or a trademark can have.

Creative Commons - a good copyright resource for Internet publishers

A difficulty for creative persons on the Internet is that they want their art/content to be widely distributed (go viral) but still want attribution.  Traditional copyright law makes such distribution difficult since each person copying the such content would need to explicit permission of the owners.

A non-profit organization has started a web site called Creative Commons that provides the owners of copyright protected work (art, photos, articles, blogs, etc) with standard licenses that allow dissemination of the material on the Internet without the loss of attribution. 

Owners of copyrights can select how much of their material can be used - with and without attribution.  The owner can also select whether or not derivative works can be created from their work.
I recommend it to bloggers and anyone who would like their work to be re-distributed on the Internet.

Of course, if you did not want your work to be redistributed, then these licenses would not be appropriate.

Great Article on Importance of Boards of Directors

R.J. Kelly of the Wealth Legacy Group wrote a great article on the importance of a good board of directors for privately held corporations.  Click here for article

Indian Tribes are Immune from Lawsuits

A little known fact is that American Indian Tribes (and their economic enterprises) can't be sued. The tribes enjoy sovereign immunity from lawsuits.  Federal and state courts do not have jurisdiction over them.  A definitive case was the Kiowa Tribe vs. Oklahoma Manufacturing Technologies.  The Kiowa Tribe defaulted on a promissory note and was sued in state court.  The lower courts found the tribe was within the jurisdiction of the state court for off-reservation economic activity.  The U.S. Supreme Court reversed and held that the tribe was immune from suit.

In recent years, Indian tribes and their casinos, in particular, have become major economic forces.  There are several Indian casinos in and around San Diego County.  Anyone contracting with them cannot enforce those contracts normally.  The tribes can sue however, just like a foreign entity not subject to U.S. jurisdiction can bring suit in U.S. courts against U.S. persons.

The exceptions are very explicit contract terms that waive sovereign immunity and/or arbitration clauses.  Anyone contracting with an Indian tribe or any entity owned by a tribe must use particular care in forming the contract with that tribe.