Form Operating Agreements Not Recommended For Multi-Member LLCs

New York "business divorce" lawyer Peter Mahler blogs about his experiences involving two members of a New York limited liability company who relied on LegalZoom to draft their LLC's operating agreement. New York's LLC act differs from California's, but the key takeaways may be the same for Californians considering entering into a partnership based on an online, cookie-cutter document:

[When] the members’ relationship turned bitter .... shortcomings in the operating agreement also contributed significantly to the parties’ legal postures and willingness to risk litigation.... I’m not suggesting that every lawyer-drafted LLC agreement is a model of perfection, but I found it incredible ... that a standard form operating agreement being sold online by a major company to the unknowing public as a more affordable alternative to using a lawyer could suffer from such a fundamental flaw that, in the end, only intensified the parties’ legal conflict.

Independent Contractors Versus Employees in California

The California Labor Commissioner has determined than a driver for Uber was misclassified as an independent contractor rather than as an employee.  The decision is under appeal and will not therefore immediately affect Uber's operations in California, although it could lead to more similar claims against them inside and outside of California, as well as more claims of misclassification by nominal independent contractors of other California companies.

Uber's assertion, if correct, that similar claims have been rejected in five other states highlights California's pro-employee labor laws.

The decision is a reminder that California small businesses desiring to keep or engage independent contractors need to do so only after consulting with an employment law attorney and implementing policies, procedures, and agreements that support the proper classification of the workers as "ICs" rather than "EEs".  In some circumstances, this won't be possible, and the workers will need to be hired as employees, or - if already working as independent contractors - converted to employees.

New California Laws for 2015

California's many new laws for 2015 include some of interest to employers, including local minimum wage increases in Richmond, San Jose, and other California cities and mandatory paid sick leave starting in July.