The High-touch Legal Services® Blog…for Startups!

© 2009-2017 Dana H. Shultz, Attorney at Law

When is a Shareholder Vote Required?

Logo for Avvo, where Dana Shultz answered a question about: when a shareholder vote is requiredThis post discusses when a California corporation must hold a shareholder vote.

It is based on an Avvo answer that I wrote recently. Please see Beside elections, are there corporate decisions that REQUIRE the vote of the shareholders?

California Shareholder Vote Requirements

A corporation must hold a shareholder vote to approve the following actions. Please note that this may not be a comprehensive list. Reference links are to the relevant California Corporations Code sections. (more…)

$800 Franchise Tax is Due Even if LLC is Canceled

Logo for Quora, where Dana Shulltz answered a question about California's $800 franchise taxThis post about California’s $800 franchise tax is based on my recent answer to a Quora question.

Q.: In California, can someone shut down an LLC before the $800 franchise tax is due on the 15th day of the 4th month?

A.: One can cancel a California limited liability company before the 15th day of the fourth month. However, such cancellation will not eliminate the obligation to pay the $800 annual franchise tax. (more…)

May a Minor Be a Partner?

Logo for Avvo, where Dana Shultz answered a question about: May a minor be a partner in a partnership?This post answers the following question: May a minor be a partner (in a partnership legal entity)? It is based on my answer to an Avvo question. Please see In California, can a minor be a partner in a General Partnership?

As initially written, this answer applied solely to California. However, an update, below, discusses applicability to other states. (more…)

Moonlighting Employees Protected by California Labor Code

California Labor Code, which has a section that protects employee moonlightingMoonlighting employees in California have a right to hold down their second jobs (or to work on startups in their spare time).

The right to moonlight – and to engage in other activities on one’s own time – is expressed in Labor Code Section 96(k).

Labor Code Section 96

Section 96 identifies, generally, the types of employee claims that the California Labor Commissioner is obligated to accept. These include, for example, claims pertaining to payment of wages and expenses; damages arising from misrepresented conditions of employment; claims for vacation pay; and awards for workers’ compensation benefits.

Moonlighting is addressed as follows. (more…)

CA-RULLCA Receives Corrections Two Years Later

Photo of CA Corporations Code, which contains CA-RULLCA statutesIn RULLCA Brings New LLC Laws to California in 2014 , I explained how California’s version of the Revised Uniform Limited Liability Company Act (“RULLCA” or “CA-RULLCA” – Corporations Code Sections 17701.01 – 17713.13 ) was to take effect January 1, 2014. This post describes changes to CA-RULLCA that took effect on January 1, 2016.

Most of the changes were minor clean-up of the sort that one expects when major new legislation is adopted. However, some of the changes are noteworthy. (more…)

“Work Made for Hire” Can Convert a Contractor to an Employee

California Labor Code, whcih can convert a contractor to an employeeIn 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.)

(more…)

Personal Cell Phone Use for Work Must be Reimbursed

Photo of the building housing the court that decided a case about reimbursing personal cell phone use by employees

California Court of Appeal for the Second District (Los Angeles)

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…)

What is an Operating Agreement?

The first page of an operating agreementI have used the term “operating agreement” in quite a few of this blog’s posts. However none of those posts explains in detail what a limited liability company (LLC) operating agreement must contain. This post provides that information.

The required contents of an operating agreement depend on the state in which the LLC is formed.

Operating Agreement – California

In California, where I practice, the definition of an operating agreement is set forth in Corporations Code Section 17701.02(s). (more…)

What are Repeated and Successive Transactions?

Seal of the California Secretary of State, with which a foreign entity must register once it enters into repeated and successive transactions within the stateIn Doing Business in CA? Be Sure to Register, I discussed when a foreign entity must register to do business in California. The test is whether the entity has transacted intrastate business, i.e., has engaged in repeated and successive transactions of business within the state. This post explores the meaning of “repeated and successive transactions“.

Repeated and Successive Transactions” Not Defined

The term “repeated and successive transactions” appears in Corporations Code Subsection 191(a). Unfortunately, that term is not defined. However, another portion of Section 191 provides a bit of help. (more…)

Who Is Bound by a Pre-incorporation Contract?

Logo for Avvo, where Dana Shultz answered a pre-incorporation contract questionThis post about entering into a pre-incorporation contract is based on a question I answered on Avvo. See Can I legally speak as my company in things like terms & conditions if I have not officially registered the company yet?

The term “pre-incorporation contract” properly should apply only to corporations, because that is the only type of business entity that is incorporated. Other types of business entities, such as limited liability companies (LLCs), are formed, rather than incorporated. However, as is discussed below, a pre-formation contract (in California, at least) is treated like a pre-incorporation contract. See 02 Development, LLC v. 607 South Park, LLC . (more…)