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.

California Local Minimum Wage Increases 2014

In the November 2014 elections, voters in the Northern California cities of San Francisco and Oakland have approved local increases to the minimum wage, that will apply to employees working within the city limits:

San Francisco: The minimum wage will rise to $15 per hour in 2018. The first increase - from the current $10.74 - is to $12.25, effective May 1, 2015.

Oakland: The minimum wage will rise from its current $9.00 to $12.25 per hour on March 2, 2015. Employers must also pay out all accrued, unpaid vacation time on this date. (March 1 is a Sunday; hence, the March 2 effective date.)

For localiites without a minimum wage ordinance, the statewide minimum wage remains at $9.00 per hour, but will increase to $10.00 on January 1, 2016.

Mayor Proposes City of Los Angeles Minimum Wage Increase

Following an increase in the California state minimum wage (with another coming in 2016), Los Angeles mayor Eric Garcetti has proposed raising the City's minimum wage by steps to $13.25 by 2017. San Francisco already has, and San Diego recently passed, a minimum wage ordinance that exceeds that required by California (which in turn exceeds the U.S. federal minimum). Employers must pay the highest of the wage rates where their employees work.

Garcetti / Los Angeles, latimes.com 9/12/2014

San Diego, cnn.com, 8/18/2014

How Not to Leave an Inheritance to a Child

A good example of why it's often not a good idea to leave an inheritance outright to a young child, and better to instead consider an ongoing trust, staggered and/or contingent distribution schedule, or simply a greater age than 18, 21, or 25 for outright distribution:

From Trust Fund Kid to Average Joe: What Blowing a $250K Inheritance Taught Me, as told to Marianne Hayes, LearnVest.com, September 9, 2014.

California Minimum Wage Increase for 2014

California's minimum wage increased from $8.00 to $9.00 per hour today (a 12.5% increase), and will rise again to $10.00 on January 1, 2016 (a further 11.1% increase). California employers must pay the higher of the applicable federal, state, or local minimum wage. For unionized workers, the minimum specified in the collective bargaining agreement.

Historical Minimum Wage Information (California Department of Industrial Relations)