Do I Have To Accommodate An Employee Who Uses Medical Marijuana?

Marijuana in the Workplace Marijuana is well on its way to being legalized in the United States.

I’m going to make a prediction right now. In about a decade’s time, marijuana will be legal to use in the United States. I say that because we are nearing a tipping point in legalization.

By the end of the 2016 election cycle, more than half the states will likely have legalized marijuana in some way.

This presents a problem for employers who have a drug-free workplace. Some employers (i.e. defense contractors) are obligated by contract to have a drug-free workplace. And of course there are safety issues.

Still, I think the law on this is going to rapidly change over the next decade. What is an employers’ obligation to accommodate an employee using marijuana as medicine?

Video Transcription:

An employee of mine uses medical marijuana. Can I fire them for violating my drug-free workplace policy?

When marijuana was illegal, the answer was yes. But rapid changes in the legal status of marijuana as medicine makes the answer less clear.

Normally, you can fire an employee for being under the influence of drugs while at work.

But when the drugs are medications lawfully prescribed to them to treat a true medical condition, then such a firing may constitute disability discrimination.

For example, if someone uses insulin to control diabetes and this makes him or her act spacey, or be unsafe, you cannot fire them.

When marijuana is legally used to treat glaucoma, cancer or seizures, the employer may be required to accommodate the employee.

Employers also do not have the right to inquire about an employee’s health, medications or medical history, including at a hiring interview.

And in most cases, employers may not drug test current employees.

If you must keep a drug-free workplace by contract, you need legal advice to deal with such tricky situations.

Ask us how we can keep you safe from lawsuits with our Employer Protection Package by calling us at 800-449-8992 or emailing us at [email protected].

I’m Going Into Business With My Best Friend. Do We Really Need a Partnership Agreement?

Business and FriendshipI had a law partner for 3 months. She and I were not friends before we partnered, actually, but we became fast friends once we decided to do business together. About a month later, she joined my law firm.

It was temporary, though. Within a couple months, we disagreed on how to build and manage the business.

We parted ways shortly after that. It seemed amicable at first… until it came to the money. Then it got a little ugly (although we worked it out pretty quickly).

Now she won’t speak to me. Needless to say, we are not friends now.

Even though I did not know her long, I felt hurt and betrayed by several of her actions. I felt also some loss and grief.

I can only imagine how much worse this would have been had we been friends for a while beforehand. I do not think that a friendship beforehand would have prevented the problems — we simply clashed over business strategy and who was responsible for making certain decisions.

So here’s the lesson: if you want to keep your friend after going into business together, you better have all the boundaries and duties worked out and in an agreement.

Video Transcript:

I’m going into business with my best friend. Do we really have to sign a big, long, complicated, legal partnership agreement?
YES.

Relationships need boundaries — especially ones that involve money.

You may be longtime friends but business is not the same as friendship.

The fastest way to kill your friendship is by going into a business partnership without clear boundaries and responsibilities.

No matter how close you are, you will have different ideas and different expectations from one another and the business.

Contracts are not about trust. You must trust someone to do business with them, whether you have a contract or not. Contracts are about defining expectations so that no one is disappointed.

They are essential in outlining the rights and responsibilities of every person or company with whom you do any business. A contract will make your business and relationships smoother.

Do you know where your legal land mines are? To find out, call us for a Business Risk Review at 800-449-8992 or email us at [email protected].

Do employers have to ensure that their employees take meal and rest breaks?

employee in suit taking breakMany employers in California know that certain employees are entitled to meal and rest breaks. But several years ago, there were multiple large class actions on the question of whether employers must “ensure” or merely “provide” breaks.

In practice, what this question means is that sometimes employees choose to not take their breaks, for whatever reason. Sometimes employees prefer to stay at their desks for lunch, for example. Or they find break time boring and would rather keep working.

In those scenarios, the employees are allowed to take breaks but are choosing not to.  In other words, the employers provide them but are not ensuring that they occur.

Is this a violation of California law? Are employer required to pay penalties when their employees do not take breaks? Are employers required to discipline or fire employees who fail to take breaks? Would an employee file a claim with the California Division Of Labor Standards Enforcement (DSLE)?

Unfortunately, the answer is not entirely clear. It is certain that employers must provide breaks. They must not prevent employees from taking breaks either expressly or with work policies that discourage breaks in a practical sense. Employers who do not have a compliant break policy in their handbooks may violate this law, simply by failing to have a policy.

The California Supreme Court has stated that employers are not required to “ensure” breaks. Employers are not required to police employees.

But here’s the rub: the argument is going to come in when employees say that work culture or work loads prevent them from taking breaks. So while employers are not required to police employees, they really should to some degree.

The best way to do this is by establishing a timekeeping system that is manageable, easy and efficient, so it becomes a force of habit and not a chore for your managers and employees. You should also train staff on appropriate break policies and encourage them to take breaks, ensuring that policies in your employee handbook, if you have one, are followed. Supervisors should be trained to encourage staff to take breaks.

These habits will keep your company from getting sued and will make lawsuits defensible if they come. Not only that, but breaks are genuinely good for your workforce’s productivity. You may find that encouraging your staff to get up from their desks to walk around, get water, stretch and socialize actually increases their alertness and camaraderie.

If you need guidance about an employment issue, please contact the employment law attorneys of Bellatrix PC at (800) 449-8992 for a consultation.

General Business Disputes Attorney

General Business Disputes

No one ever begins a professional relationship anticipating that relationship will later turn sour. Unfortunately, contentious business disputes can still arise for any number of reasons.  When commercial litigation arises from alleged breach of contract, unfair competition, improper use or disclosure of trade secrets, or other violations, it is critical to protect your company’s legal and financial interests by working with an experienced team of business defense attorneys.

ripped contract from a business dispute

At Bellatrix PC, we understand the economic impact commercial litigation can have on a business, and our legal team will sit down with you to discuss your goals and concerns in detail with a cost-benefit analysis.  We are dedicated to finding practical and cost-effective solutions to even the most complex of conflicts, including mediation and arbitration where appropriate, and have obtained favorable outcomes for numerous clients across a wide spectrum of industries.

We defend businesses against claims involving, but not limited to, the following matters:

To arrange for a private legal consultation with our experienced commercial litigation attorneys, call the law offices of Bellatrix PC at (800) 449-8992.  Don’t wait for your dispute to escalate – call today to start discussing how Bellatrix PC can assist.

What Are the Elements of Breach of Contract?

Most business disputes arise because two or more parties disagree about their rights and responsibilities under a contract or agreement, such as a stock purchase agreement or a franchise agreement.  However, not all contractual disputes provide a strong basis for claiming breach of contract.  In order for a breach of contract claim to be successful, all of the following elements must be in place:

  • A formal contract must have existed between the parties.  Be advised this can extend to oral contracts and verbal agreements.
  • The plaintiff company must have either fulfilled or been excused from its contractual obligations.
  • The defendant company must have either:
    • Failed to fulfill its contractual obligations.
    • Engaged in conduct which was prohibited by the contract.
  • The plaintiff company must have been harmed by the defendant company’s failure to satisfy its end of the contract.

The burden of proof falls upon the plaintiff, who must be able to demonstrate that the aforementioned criteria have been satisfied.  Moreover, the plaintiff must prove the defendant’s breach was material, or significant enough to actually result in damages to the plaintiff.  Immaterial or non-material breach generally does not excuse the plaintiff from fulfilling its end of the contractual agreement.

Resolving Investor and Partnership Disputes: Mediation or Commercial Litigation?

Sometimes disputes arise within a single entity, such as a dispute between partners or investors.  Internal disputes can be just as if not more debilitating than external disputes, impairing efficiency, demoralizing personnel, and bringing the affected company to a stand-still for as long as the disagreement persists.  It is imperative to resolve internal disputes as rapidly as possible so that the business can continue to flourish.

In these types of cases, it may be appropriate to seek conflict resolution through mediation before resorting to the more aggressive measure of litigation.  While litigation sometimes proves necessary to achieve a favorable outcome, mediation carries several advantages of its own.  For example:

  • Litigation pits opposing parties against one another, which can create feelings of bitterness and mistrust.  Mediation offers a more cooperative and mutually-determined means of conflict resolution, which is ideal for preserving professional relationships.  Mediation can help keep a business together, instead of resulting in a schism between partners.
  • Mediation is simpler and less time-consuming than litigation.  The sooner you can resolve your dispute, the sooner you can resume normal operations.
  • Protracted litigation can deplete a company’s assets, which ultimately serves no one.  In addition to protecting your professional relationships, mediation can also help to protect your company’s bottom line.

If your company is trapped in gridlock, or if your business has been served with a summons, try not to panic.  While it’s perfectly normal to feel anxiety, anger, and frustration, it is critical that you assess and approach the situation calmly. It is of the utmost importance that you resist the temptation to lash out, whether in person or on social media, as any statements you make could potentially have a negative impact on the outcome of the case.

The better way to respond to an internal dispute or a legal claim against your company is to immediately contact an attorney for assistance.  The business defense lawyers of Bellatrix PC have extensive experience helping partnerships, limited liability companies, and corporations efficiently resolve their internal and external disputes.

To schedule a private legal consultation, call our law offices right away at (800) 449-8992.  Let’s start discussing how our team can help yours.

Operating Agreements

OPERATING AGREEMENTS

All new companies should utilize written agreements outlining key matters such as personal liability, distribution of profits and managerial responsibilities, and how breach of contract will be handled in the event of a future dispute or lawsuit.  However, these documents have different names and functions depending on the legal structure of the underlying business.

start-up company new business paperwork

For example, only limited liability companies (LLCs) utilize operating agreements.  Partnerships use partnership agreements, while S-Corporations and C-Corporations use articles of incorporation.  While all of these documents share some basic similarities, operating agreements are designed for a different purpose than partnership agreements or articles of corporation.  A well-crafted operating agreement should supply detailed provisions for matters like voting rights and management plans.

Because the operating agreement builds the foundation upon which virtually every aspect of the LLC will rest, it is absolutely critical for entrepreneurs and LLC managers and members to utilize clear and detailed documents which simultaneously comply with state and federal laws while protecting the financial interests of the business.  The limited liability company lawyers of Bellatrix PC have extensive experience drafting tailored operating agreements on behalf of LLCs in a wide variety of industries.  To arrange for a confidential legal consultation, call the law offices of Bellatrix PC today at (800) 449-8992.

RULLCA Update: New Laws for California Limited Liability Companies

All LLCs operating in California are required to establish formal operating agreements.  This requirement is provided by Cal. Corp. Code § 17050(a), which states, “In order to form a limited liability company, one or more persons shall execute and file articles of organization with, and on a form prescribed by, the Secretary of State and, either before or after the filing of articles of organization, the members shall have entered into an operating agreement.”  However, there have been some important legal updates to the process in recent years.

On January 1, 2014, California’s former Beverly-Killea LLC Act was replaced by the California Revised Uniform Limited Liability Company Act, more commonly known as RULLCA.  RULLCA makes significant changes to the previous rules governing operating agreements in California, with which new and existing LLC managers and members must familiarize themselves.  Note that existing LLCs may need to amend or modify operating agreements which were created prior to January 1, 2014 in order to be compliant with the new laws.

Some of the changes resulting from RULLCA are described below:

  • Default Member Management – RULLCA makes all LLCs member-managed by default.  If you wish to avoid automatically defaulting to management by members, then both your operating agreement and your articles of organization must include a clause explicitly restricting management by managers.  This clause must be carefully worded in order for the LLC to avoid defaulting to a member management system.  If your LLC is currently manager-managed, but your operating agreement and articles of organization do not include these clauses, prompt review by an experienced business lawyer is absolutely crucial.
  • Modification of Fiduciary Duties – Under Beverly-Killea, LLC managers had the same fiduciary duties to their members as partners did to their partnerships.  Under RULLCA, a manager’s fiduciary duties are further clarified, being categorized into three groups: good faith and fair dealing, the duty of care, and the duty of loyalty.  In turn, the duty of loyalty is subdivided into three additional duties: the duty to avoid competition, the duty to avoid self-dealing, and the duty to account.
  • Unanimous Member Consent – Under RULLCA, LLC managers are not permitted to take any actions which fall “outside the ordinary course of business” unless there is unanimous consent from all members of the LLC.  These actions might include selling assets, proceeding with mergers and acquisitions or entity conversions, or making material changes to the operating agreement itself.

The above examples are by no means exhaustive or representative of all changes enacted by RULLCA.  Regardless of whether you plan to start an LLC, or are already a member or manager of an existing entity, RULLCA compliance is always a must.  Our business law attorneys will assess your current documentation for vulnerable points with our comprehensive business risk review, so that you can feel confident and secure.

What Should Be Included in an LLC Operating Agreement?

While all operating agreements inevitably share some core features, it’s important to emphasize that template-based, boilerplate operating agreements should be avoided at all costs.  Prefabricated operating agreements will never provide the same degree of forethought as custom-made agreements, and usually cause more harm than they prevent – particularly in light of the recent changes under RULLCA. Bellatrix PC will listen to your goals, questions, plans, and concerns, and will help you prepare a unique agreement that aligns with your company’s practical needs.

With that in mind, any operating agreement should make sure to address the following points:

  • Voting rights among LLC members.
  • A management plan clearly establishing whether the LLC will be member-managed or manager-managed.
  • Capital contributions from individual members.
  • Procedures to be followed should a new member be admitted to the LLC, or in the event that a member decides to step down.
  • How the company’s profits and losses will be distributed.
  • What will happen to the LLC if a manager passes away or becomes severely disabled.
  • How dissolution and going out of business will be handled.

If you’re thinking about starting an LLC in California, or if it’s time for a review of your LLC’s existing agreement, articles of organization, or other documents or policies, Bellatrix PC is here to help.  To set up a private consultation, call our business attorneys today at (800) 449-8992.

 

Disgruntled Workforce Means Problems

If you have a morale problem with your workforce, you better do something about it… fast.

When you have a disgruntled worker, it always leads to problems.

As a business owner, here are the problems I see when a person turns bad apple:

  • They “poison the well” and create negativity amongst your other staff
  • People lose their drive and initiative, so work quality suffers
  • People start scrutinizing the employer or developing “grievances”
  • The bad person (or several) have to be replaced, costing money

In addition to the practical aspect of having to spend more money replacing employees (not a small consideration in itself), leaving employees always carry risk. People tend to treat a break in an employment relationship with the same emotions as leaving a personal relationship.matches burning

In other words, unhappy ex-employees sue. Even when you are squeaky clean, unhappy ex-employees will threaten it.

Sometimes they will sue frivolously, and you end up with a problem, regardless. There will always be a percentage of litigious ex-employees, which means that if more employees are leaving, then there will be a proportionate increase in the number of lawsuits.

Here’s another legal issue: demoralized employees take more stress-related medical leaves. This actually happens a lot and is the leading cause for medical leaves. It’s really easy to violate the leave and disability laws (thus inviting lawsuits). It’s also disruptive to your workforce. And an unhappy, stressed employee doesn’t always recover and return to employment smoothly.

Finally, whenever employees leave, employers must immediately pay all earned compensation (including vacation pay, non-discretionary bonuses and earned commissions). If you do not have a bunch of cash on hand to deal with terminating and replacing employees, you may find yourself in the middle of a wage and labor crisis.

What can an employer do to avoid employee morale problems bankrupting them?  Here are four strategies that could save you thousands of dollars.

  1. Focus on improving employee morale and retaining skilled workers. Take some time to improve relationships with those employees and foster loyalty and contentedness. This is not just a hippie-dippy people idea. Research shows that people work based on “purpose” (which includes a strong sense of community, being valued, loyalty and other social factors), not based on money. Yes, people need money. But an employer who fosters the right social conditions can get away with lower pay or other hardships without loss of morale. And definitely get rid of the bad apples because their drama is unfair to the rest of your team.
  2. Clean up your HR act by reviewing employees. Employees actually want to be reviewed if they care about their jobs (see point above regarding purpose). You can use reviews to praise (important) and address frustrations and failures that cause low morale. You should also use this as an opportunity to document issues with problem employees so that you can defend yourself later.
  3. Audit your wage and pay practices with the help of your employment lawyer.  Wage and pay class actions are the most common type of class action litigation filed in California, constituting roughly two-thirds of all new class actions being filed and hundreds of new cases each year.  You are vulnerable to these types of lawsuits if your pay practices aren’t pretty close to perfect (and there are many laws out there that are traps for the unwary employer, so do not trust an HR service or a do-it-yourself). Not only do audits give you an opportunity to find and fix liabilities before they become lawsuits, but you can use it as an opportunity to show your workforce positive change and encourage their loyalty.
  4. Encourage — or even require — your employees to take their accumulated vacation during slow times.  This is a good way to get vacation time off the books of an employee who has thousands of dollars worth stocked up, which will have to be paid in total at the time of quitting. Plus, employees who take regular vacations are less stressed and happier.

If you have any business or workforce concerns, spend 30 minutes with us on a free Business and Employment Planning Session or schedule a consultation with one of our business law attorneys or our real estate attorneys at (800) 449-8992.