California Now World's 9th Largest Economy

California is now the world's ninth largest economy. Which is quite something and remains the U.S. state with the largest economy ranked by GDP, but it was until recently, the eight largest, a rank now assumed by Brazil, and was even fifth on the list in the early 2000s:

Stephen Levy, Center for Continuing Study of the California Economy director and senior economist, said the California-Brazil swap is more about Brazil rising than California falling. Brazil’s vast population advantage (190 million to California’s 37 million) and the increasing prices of commodities that Brazil exports are just part of the country’s rise, he said....

Levy said California’s economy could soon surpass Italy’s, because of a recession in Italy and a falling euro.

"Report: California slips to world's 9th largest economy" by Jason Hanna, CNN, January 13, 2012

Governor Brown Proposes Tax Increases for Californians

California Governor Jerry Brown is proposing increased taxes as the solution to the state's budget problems:

Brown, a 73-year-old Democrat, wants to raise income taxes on individuals making at least $250,000 a year to 10.3 percent from 9.3 percent, and would boost sales [tax] levies to 7.75 percent from 7.25 percent.

Brown Seeks 7% California Spending Boost, Michael B. Marois and James Nash, Bloomberg, January 5, 2012

See also current California sales tax rates.

Small Estates Probate Limit Increased

Effective 1/1/2012, Califorina's small estate limit is increased from $100,000 to $150,000, meaning that, where the decedent has a will or died intestate (without a will), and the gross value of the estate is $150,000 or less, and does not include real property (real estate), a simplified affadavit procedure may be utilized instead of a full probate.

The limit for transferring real property withour probate increases to $50,000 - likely making little difference in most instances in Los Angeles County, but possiby of some occasional application with regard to unimproved land and timeshares.

Under the new law, a surviving spouse may also collect up to $15,000 in wages owed to his or her deceased spouse without a formal probate proceeding.

Note that assets held in a living trust avoid the time and expense of probate, and that the value of the estate is calculated without regard to any mortgages or other indebtedness. For example, a $450,000 market value house with a $400,000 mortgage counts as $450,000 of estate value, and therefore would not qualify for the small estate procedure.

2012 New California Employment Laws

Among the new employment laws in California for 2012 are:

• Employers are now generally prohibited from using consumer credit reports to screen candidates for employment. Exceptions exists for employees with access to trade secrets or $10,000+ of cash of the employer, or to confidential information or $10,000+ of cash of others, executive employees, etc.

• Genetric discrimination is now prohibited.

• Upon hire, an employer must now provide the employee with a written notice specifying certain information about the employer and the employee's job, including workers' compensation insurance carrier information.

• Penalties for wilfully misclassifying workers as independent contractors instead of employees are increased (a new civil penalty of $5,000 to $15,000 per violation is added to existing penalties).

• The minimimum salary for exempt computer professionals increases, as does the minimum hourly rate for physicians paid hourly.

• Employers covered by the pregnancy disability leave law must maintain and pay for group health insurance during the leave, up to 4 months in a 12-month period.

• Moving in the opposite direction from much of the nation, California now prohibits state and local governments in most instances from requiring employers to use the federal E-Verify system to ensure candidates are legally permitted to work in the United States. (Effective today, Georgia, Lousiana, Tennessee, and South Carolina joined a minority of other states already mandating the use of E-Verify. While other states were cracking down on illegal immigrants, California has now enacted the Dream Act, allowing in-state tuition to some illegal immigrants.) California employers may voluntarily choose to use E-verify, however, and must do so if it's a condition of federal law or the receipt of federal funds. The new law appeared to be aimed at a number of conservative-leaning Califoria cities who had already, or who were considering passing, local mandatory E-Verify laws.

• San Francisco becomes the first city in the nation mandating a minimum wage greater than $10 per hour. While the wage rate is new, the law was actually passed years ago, but requires adjustements each year to keep pace with inflation. The minimum wage for most California cities without a higher local rate remains at $8.00 per hour for 2012.

• As is common, some required work place posters have been updated.

See other new California laws for 2012.

California Flexible Purpose and Benefit Corporations

Enacted in October 2011 and effective today, January 1, 2012, Corporations Code Section 2500 et seq. and Section 14600 et seq. create two new types of business entities, the flexible purpose corporation and the benefit corporation. Both allow the organization of corporations which are, while not non-profit, encompass both economic profit, as well as social welfare, objectives. In short, these are hybrids between traditional for-profit corporations, and traditional nonprofits. Or, if you prefer, socially conscious stock corporations.

Flexible purpose corporations may pursue social welfare objectives without liability to directors for not maximixing profit; one or more "special purposes" must be specified in the Articles of Incorporation. Benefit corporations must pursue social welfare objectives and have more transparency requirements that traditional stock corporations.

Benefit corporations permit corporate directors to take into consideration and to pursue general or more specific social welfare goals, in addition to the tradtional profit motive, and will not be liable on account of pursuing these objectives for not maximizing shareholder return.

These are new and untested entities in California, and therefore are obviously not right for all incorporations, but benefit corporations are already in existence in other states, and more states still have bills proposed and pending. Neither form will offer tax exemption.

See also Berkley Law: New Corporate Forms
Q&A on Flexible purpose corporations

Update: California businesses seeks new 'benefit corporation' status, Marc Lifsher, Los Angeles Times, January 3, 2012

New California Laws for 2012

Ringing in a new year means news laws, and this year, new California laws include:

• Perhaps most controversial, the Dream Act allows in-state tuition rates for qualifying illegal immigrants.
• Public schools must include lessons about historical achievements of gays/lesbians and the disabled
• Cough syrup and other products containing dextromethorphan, e.g., Robitissin DM and Nyquil, will now require a prescription for purchase by minors.
• Sale and distribution of shark fins is prohibited. This law targeted a Chinese delicacy, shark fin soup.
• Beer with caffeine is also outlawed.
• Parents must keep children in a car seat until the earlier of the age of eight, or the child reaches the height of four feet, nine inches.
• Crossing double white lines on the highway is now illegal.
• Open carry of unloaded firearms is now prohibited.
• Tanning bed use by those under the age of 18 is now prohibited.
• Internet retailers must collect California sales tax on transactions if the retailer has a presence in the state.
• Contractors are now allowed to do business with LLCs instead of only corporations

See also -

New California Employment Laws for 2012;
New Probate Laws for 2012;
Jery Brown Signs California Dream Act, Patrick McGreevy and Anthony York, Los Angeles Times, October 9, 2011;
Dream Act is a nightmare for California tax payers, Jose Gizzardi, Lodi News Sentinel, December 31, 2011;
CHP List of New Traffic Laws