In California, a “work made for hire” (WMFH) provision in a contract can convert a contractor to an employee. This post describes the statutory basis for this little-known area of the law.
Before providing details, I will note that the (likely unwanted) ability to convert a contractor to an employee will arise only under narrowly-defined circumstances.
- The independent contractor must be an individual rather than a legal entity (a corporation or limited liability company).
- The relevant contract must expressly specify WMFH treatment for the contractor’s work product.
- The contractual relationship must be governed by California law. (I don’t know whether any other states have similar laws.)
This post discusses a 2014 case (Cochran v. Schwan’s Home Service, Inc.) which held that California employers must reimburse employees who use a personal cell phone for work.
Plaintiff Colin Cochran, as class representative, brought a class action lawsuit against Schwan’s Home Service (“Home Service”) on behalf of 1,500 service managers employed by Home Service. The suit sought, among other things, reimbursement of the managers’ work-related personal cell phone expenses. (more…)
Do you wonder why lawyers often have a bad reputation? If so, consider the ridiculous Yelp lawsuit alleging that Yelp’s reviewers are employees of the company.
Yelp is an online review site and local business search service. Consumers are encouraged to write reviews of, and rate their satisfaction with, various products and services.
Historically, controversies have concerned whether Yelp punishes businesses for not advertising on the site (which Yelp denies). More recently, business owners have complained about Yelp’s automated tools for removing false or inappropriate (e.g., paid) reviews based on unpublished criteria.
Labor Compliance Office is one of many companies that use fear of the law and subterfuge to extract money from naive owners of small businesses. What is interesting about LCO, however, is that it focuses on compliance with labor laws rather than corporate laws.
One of my clients brought Labor Compliance Office to my attention. (As agent for service of process for several other clients, I had already received copies of LCO’s pink-accented NOTICE.) Fortunately, even though the notice looks like it came from a governmental entity (the disclaimer is not readily apparent), my client was not taken in by the threat of fines up to $17,000.
Labor Compliance Office proposes to help the reader’s business avoid such fines by providing for $275 a poster that includes all notices required by California and federal labor laws. In addition, the business receives:
Effective January 1, 2013, every employee in California who is compensated, entirely or partially, by commission must have a written employment contract that states the method by which commissions will be computed and paid.
By January 1, 2013, whenever an employer enters into a contract of employment with an employee for services to be rendered within this state and the contemplated method of payment of the employee involves commissions, the contract shall be in writing and shall set forth the method by which the commissions shall be computed and paid.
In Doing Business in CA? Be Sure to Register, I wrote that an out-of-state corporation that “enter[s] into repeated and successive transactions of its business in [California] other than interstate or foreign commerce” must register with the Secretary of State as a foreign corporation, and that a penalty for failing to do so is being precluded from maintaining actions in California courts. A recent case in the US District Court for the Northern District of California (Jarzab v. KM Enterprises) provides an example of what does not constitute “repeated and successive transactions”.
This post is adapted from a question I answered on OnStartups. Q. I’ve been working for a large private company, and my offer letter said I would receive X number of options as long as the board approved it. It’s been a year and I’ve been stonewalled on the option plan. I’ve sent multiple emails to HR and the controller and the CFO. HR has gotten back to me, but their hands are tied. Can I send a letter and a check to the CFO with $100 to force the issue of exercising some amount of shares and determining the strike price that way?
A. Unfortunately, “subject to board approval” is a common contingency for stock option grants. At this point, I’m not sure there is much you can do about it.
Although I’ve written quite a few posts about employee handbooks, I just realized that I never have explicitly stated why an employer should have one – thus, the topic of this post.
An employee handbook is a collection of policies, procedures and other important information that is provided to every employee.? Reasons for having an employee handbook include:
- To let every employee know what is expected of him or her on the job
- To help ensure that employees are treated equally and appropriately
- To reduce employee morale problems and complaints related to unstated policies or procedures
- To reduce the risk that employees will allege unfair practices or unlawful discrimination
- To enhance the perceived authority and appropriateness of employer decisions that are based on the handbook
The CEO of a client with a half-dozen employees recently asked, “We are about to start hiring again. I would like to add language regarding a 90 day probationary period. Is this a good idea?” My answer was “No.” Here’s why.
I had prepared a form of employment offer letter and an employee handbook for the client. Both of these documents state that employment is at-will. This means that either party may terminate the employment relationship at any time for any (non-discriminatory) reason or for no reason. As a result, at-will employment, by itself, allows a company to terminate the employment of an individual whose performance is inadequate during the first 90 days. A probationary period is not necessary.
California courts are known for not enforcing non-compete provisions except under narrowly-defined circumstances (see “California doesn’t *always* prohibit non-compete provisions”). In a case last year (Silguero v. Creteguard, Inc.), the Court of Appeal for the Second District held that an employer may not terminate an employee because of another company’s unenforceable non-compete agreement.
In 2003, Rosemary Silguero began working for Floor Seal Technology, Inc. (“FST”). In 2007, FST threatened Silguero with termination if she did not sign a confidentiality agreement that included an 18-month post-employment non-compete provision. Two months later, FST fired her.