Unpaid wages, unpaid bonuses or unpaid commissions all refer to the same basic wrong, the employee was not paid!  Litigation for unpaid wages, bonuses or commissions are among the most frequently filed lawsuits in America.

In an earlier blog post, we highlighted that under California statutory law, “wages” are broadly defined, and that case law has specifically included “bonuses” in the definition of wages.

Why it matters….

Pursuant to California Labor Code § 201 et. seq., if an employer discharges an employee, the wages earned and unpaid at the time of discharge are due and payable immediately. Simply put wages are due on the date of termination. If you are employer you should build that into your planning when conducting terminations or layoffs. If you are employee, you should make sure that you are paid all wages due on your date of termination, and certainly prior to signing any release. Failure to properly and timely pay wages can have consequences far in excess of the underlying amount due, including:

  1. waiting time penalties;
  2. interest and
  3. attorney’s fees.
Waiting Time Penalties

California Labor Code § 203 “[i]f an employer willfully fails to pay, without abatement or reduction, in accordance with sections 201, 201.5, 202, and 205.5, any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty from the due date thereof at the same rate until paid or until an action therefore is commenced.”

Interest

California Labor Code § 218.6 further provides that “[i]n any action brought for the nonpayment of wages, the court shall award interest on all due and unpaid wages at [an annual rate of 10 per cent] as mandated by subdivision (b) of § 3289[1] of the California Civil Code, which shall accrue from the date that the wages were due and payable as provided in Part 1 (commencing with § 200) of Division 2.”

Attorney’s Fees

“In any action brought for the nonpayment of wages, fringe benefits, or health and welfare or pension fund contributions, the court shall award reasonable attorney’s fees and costs to the prevailing party…” Labor Code §218.5. With the cost to get to trial in high-stakes cases running well into six figures on the plaintiff’s side, there is substantial exposure to a defendant company that fails to properly pay wages.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc |  LinkedIn | Facebook | YouTube

What amounts are included in wages? We get variations on this question all the time including, “Is my bonus part of my wages?”

The Law

Wages are defined under California Labor Code § 200 to include “all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.” This is a very broad definition that includes virtually any form of compensation used in the modern economy, so long as it is “fixed or ascertainable” by some “method of calculation.”

Yes, under California law bonuses are wages. Ralphs Grocery Co. v. Sup. Ct. (Swanson) (2003) 112 Cal. 4th1090, 1103, 5 Cal. Rptr. 3d 687, 697.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc |   LinkedIn | Facebook | YouTube

 

What is a §1031 Exchange?

Section 1031 provides for “Nonrecognition of gain or loss from exchanges solely in kind: (1) In general. No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment.” In short, this means that if you want to sell an investment property now worth $3,000,000, that you originally purchased for $1,000,000, Section 1031 will allow you to rollover the entire $3,000,000 (including the roughly $2,000,000 in gain calculated as $3,000,000 minus $1,000,000, leaving depreciation out for the sake of simplicity) tax free!

Some Rules

In order to qualify for tax free treatment under Section 1031, the Seller must (1) use a Qualified Intermediary; (2) Identify the replacement property within 45 days; (3) The replacement property must be “like-kind” and (4) The replacement property transaction must close within 180 days of the closing of the relinquised property. As may be obvious, this area of real estate law is “jargon-heavy.”

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888

In the current recession, commercial landlord’s are just beginning to feel the pressure from tenants seeking rent concession or the outright elimination of their rent obligation. See Wall Street Journal, “Struggling Retailers Press Struggling Landlords on Rent”, January 2009. There is also a rapidly shrinking pool of high-quality “anchor” as major retail chains file bankruptcy seemingly one after the other. As a commercial property owner, what should you do to protect your interest?

Surrender or Termination or Both.

A lessee cannot effect a surrender and termination of a lease unilaterally. The landlord must accept the offer of termination for it to be in effect. Under California law, an abandonment of the premises by the tenant is merely an offer to surrender their lease. See Miller & Starr, 3rd. Ed., Vol 7, Sec. 19.

Upon receiving an offer of termination from a tenant, a commercial landlord must make an election of his remedy: (1) Ignore the offer to terminate, treat the lease as continuing and sue to recover rent as it becomes due provided that the lease permits the lessee to sublease or assign its interest; or (2) Accept the offer to terminate, and pursue remedies under CCC §1951.2.

How well companies and individuals managing real estate assets through an economic downturn is critical to long term success in real estate.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele

via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc | LinkedIn | Facebook | YouTube

 

Minority shareholder rights in California include protections from oppressive conduct by the majority shareholder.

California Corporation Code § 1800 provides several grounds for involuntary dissolution. A court may grant involuntary dissolution where (1) “[t]hose in control of the corporation have been guilty of or have knowingly countenanced persistent and pervasive fraud, mismanagement or abuse of authority or persistent unfairness toward any shareholders or its property is being misapplied or wasted by its directors or officers.” § 1800(b)(4), and (2) “liquidation is reasonably necessary for the protection of the rights or interests of the complaining shareholder or shareholders.” § 1800)(b(5). See also Bauer v. Bauer, 46 Cal.App.4th 1113, 54 Cal.Rptr.2d 377, Stuparich v. Harbor Furniture Mfg., Inc. 83 Cal.App.4th 1268, 100 Cal.Rptr.2d 313, 2000 Daily Journal D.A.R. 10,657.

Involuntary corporate dissolution under subdivision (b)(4) requires a showing that those in control of the corporation have been guilty of, or have knowingly countenanced, “persistent and pervasive fraud, mismanagement or abuse of authority or persistent unfairness toward any shareholders,” or that the corporation’s property “is being misapplied or wasted by its directors or officers.”

Bauer described the course of conduct that satisfies the definition of the improper “squeezing out” of a minority shareholder, thus entitling a minority shareholder to dissolution of the corporation to protect his or her interests. The court took its definition of a from Marsh’s California Corporation Law, the portion quoted by the Bauer court is below:

“The term ‘squeeze-out’ is . . . generally intended to describe a situation where the majority controlling shareholders, who are also the principal officers of a corporation, engage in a course of conduct which is designed to exclude a minority shareholder or shareholders both from participation in the conduct of the corporate business and from the economic benefits derived therefrom . . . The conduct most typically takes the form of refusing to pay any dividends on the corporate stock, refusing to permit the minority shareholder to have any corporate office or position on the board of directors . . . , and the payment of large salaries to the controlling shareholders who are the principal officers of the corporation . . . Obviously it makes a great deal of difference whether dividends had once been paid on a regular basis, but were stopped; whether the minority shareholder had a job with the corporation from which he was fired; and whether the controlling majority shareholders increased their own officers’ salaries, after the rift appeared and the dividends were terminated.” 2 Marsh’s California Corporation Law (3d ed. 1995) § 11.46, 958-960

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc |   LinkedIn | Facebook | YouTube

Minority shareholder rights in California include protections from a breach of fiduciary duty by the majority shareholder.

Majority shareholders may be held liable for damages for breach of a fiduciary obligation to minority shareholders, Jones v. H. F. Ahmanson & Co., 1 Cal.3d 93, 81 Cal.Rptr. 592, 460 P.2d 464; Brown v. Halbert, 271 A.C.A. 307, 316, 76 Cal.Rptr. 781; and 3 Witkin, Summary of Calif. Law (1960) Corporations, s 99, p. 2390 (1967 Supp. p. 998). A majority shareholder breaches his fiduciary duties to the minority when he uses his control to distribute a disproportionate share of corporate profits (whether in the form of a dividend of excessive executive compensation), depriving the minority of its fair share of corporate profits. See Jara v. Suprema Meats (2004) 121 C.A.4th 1238, 18 C.R.3d 187Witkin Summary of California Law, Tenth Edition 2. [§ 181].

In Jara, the court found that a minority shareholder had the right to bring an individual action against the corporation for excessive compensation paid to the two other shareholders, who were also executives and directors of the corporation. The court stated, “The objective of encouraging intracorporate resolution of disputes and protecting managerial freedom becomes meaningless where defendants constitute the entire complement of the board of directors and all the corporate officers.” See Jara, supra, at 1259.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc |   LinkedIn | Facebook | YouTube

What is an Exchange Fund?

An exchange fund allows company founders and other large shareholders to contribute a portion of their own company stock in exchange for an ownership percentage (i.e. limited partnership interest) in a new entity that

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holds a diversified portfolio of private company shares. As the portfolio companies realize liquidity events (IPO, acquisition, etc.), the limited partners in the new entity all share in the cash or stock distributions.

The Benefits

Conceptually, as a company co-founder, you are “going long” on your single idea. In the meantime, your venture backers (and maybe your lawyers) have literally dozens of other company co-founders just like you “going long for them.” The exchange fund allows you to shift part of your portfolio to mirror the “higher-quality risk profile” of your venture capital backers. Yet, you still retain a significant percentage of your company shares.

Exchange funds offer diversification, venture capital scale returns, higher likelihood of a liquidity event, possible tax advantages versus a comparable cash investment in a venture fund and no out of pocket costs for participants.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc | LinkedIn | Facebook | YouTube