Changes in the Law 2019

CHANGES IN THE LAW 2019 – CORPORATE

[the following changes were found in Parasec Alert, the Newsletter of Parasec, National Entity Formation and Compliance [https://www.parasec.com/news/alert/AlertArchive/alertJan2019.html]]

CALIFORNIA: AVOID STATE TAXES; DISSOLVE BEFORE STATE DEADLINE

Qualified business entities that file for dissolution with the California Secretary of State by January 15 will not be charged any state franchise taxes for 2019. Eligible entities include corporations, LLCs, LLPs, LPs, and nonprofit corporations. If you need assistance with dissolving your entity, give us a call at 800.533.7272.

CALIFORNIA: SUNSET DATE EXTENDED FOR ARCHITECT, ENGINEERING AND LAND SURVEYING FIRMS TO ORGANIZE AS LLPS

On July 20, 2018, Governor Jerry Brown signed into law Senate Bill 920 (SB 920), which extended the permission for engineering, land surveying, and architectural firms to organize as limited liability partnerships (LLPs) in California. Without this legislation, the ability for architects, engineers and land surveyors to form LLPs would have expired on January 1, 2019; instead, the permission has been extended to January 1, 2026. Read the bill here.

California: Bill Requires Corporate Boards to Include Women

Senate Bill 826, signed by governor Jerry Brown on September 30, 2018 (effective January 1, 2019), has made California the first state in the country to require that women be included on corporate boards of directors. The new law requires publicly traded corporations headquartered in California to include at least one woman on their boards of directors by the end of 2019; however, that number is set to ramp up by December 31, 2021—increasing the number to two female directors if the corporation has five directors, or three female directors if the corporation has six or more directors. Read more details here.

CHANGES IN THE LAW 2019 – EMPLOYMENT AND BUSINESS LAWYERS

The following changes in the law for 2019, were taken from CEB’s 2018 NewsFlash, concise outlines of the key statutory changes for California lawyers in several practice areas. Click below to read more about the changes and new developments that could impact your practice this year. NewsFlash is part of CEB’s mission to provide practical legal resources to help California lawyers achieve success. To review all the changes in the law for 2019 set forth in CEB’s 2018 NewsFlash [https://ceb.com/newsflash-key-statutory-developments-for-california-attorneys]

CHANGES – EMPLOYMENT

MORE SEXUAL HARASSMENT PREVENTION TRAINING

For the past several years, employers with 50 or more employees have been required to train supervisors every two years about preventing and dealing with sexual harassment in the workplace. That requirement now extends to every employer in California subject to FEHA (i.e., all employers with five or more employees). It also extends to all employees, not just supervisors. Supervisors must get two hours of training, and all other employees one hour of training. Employers have until January 1, 2020 to comply. See Govt C §12950.1(a) (amended by Stats 2018, ch 956).

NEW ACCOMMODATIONS FOR NURSING MOTHERS

When Lab C §1031 was originally enacted—requiring employers to provide a place for nursing mothers to express their milk at work—a popular response must have been, “Hey, use the bathroom!” The Legislature has rejected that response with a new law requiring employers to make reasonable efforts to provide a room or other location in close proximity to the employee’s work area—other than a bathroom—for this purpose. If this isn’t feasible, a temporary location is okay if it’s private and free from intrusion and used only for lactation purposes. See Lab C §1031 (amended by Stats 2018, ch 940, effective January 1, 2019).

#METOO RIPPLE EFFECT ON CONTRACTS AND SETTLEMENT AGREEMENTS

The #MeToo movement has brought the issue of sexual harassment in the workplace front and center, and lawmakers have responded. In California, at least 20 bills were introduced in the last session to combat sexual misconduct and hold offenders accountable. One new law declares that a provision in a contract or settlement agreement that waives a party’s right to testify in a proceeding on alleged criminal conduct or alleged sexual harassment by the other party to the contract or settlement agreement, or its agents or employees, is void and unenforceable. See CC §1670.11 (added by Stats 2018, ch 949, effective January 1, 2019). Another new law states that a settlement agreement in a civil action cannot prohibit the disclosure of factual information related to a claim of workplace harassment or discrimination based on sex (except for the name of the claimant). See CCP §1001 (added by Stats 2018, ch 953, effective January 1, 2019).

FORMER EMPLOYER’S STATEMENTS ABOUT SEXUAL HARASSMENT ARE NOW PRIVILEGED

Existing law makes certain communications privileged and therefore protected from civil action, including those about the job performance or qualifications of a job applicant that are made without malice by a current or former employer to a prospective employer. A new law extends that privilege to complaints of sexual harassment by an employee. The privilege also permits a current or former employer to answer whether or not the employer would rehire a current or former employee and whether the decision to not rehire is based on the employer’s determination that the former employee engaged in sexual harassment.

ATTORNEYS MUST HAVE CLIENTS SIGN A NEW DISCLOSURE BEFORE MEDIATIONS

Evidence Code §1119 provides that anything said, any admission made, or any writing prepared for mediation is inadmissible and protected from discovery in a subsequent proceeding. Clients are sometimes surprised to learn that this also means malpractice lawsuits against their own attorneys. To address this problem, attorneys must now get their clients to sign a disclosure before mediation, acknowledging that the clients understand the confidentiality restrictions. The statute provides a model disclosure for this purpose. See Evid C §1129 (added by 2018 Stats, ch 350, effective January 1, 2019).

NEW RESTRICTIONS ON ATTORNEY FEES IN FEHA ACTIONS

A new law provides that, notwithstanding CCP §998, a prevailing defendant in a FEHA action cannot be awarded fees and costs unless the court finds that the action was “frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” See Govt C §12965(b) (amended by Stats 2018, ch 955, effective January 1, 2019).

CHANGES – BUSINESS LAWYERS

COMPANIES WILL HAVE TO BE MUCH MORE CAREFUL WITH CONSUMER DATA

The California Consumer Privacy Act of 2018, modeled after the EU’s General Data Protection Regulation, is set to dramatically change how businesses handle data. Companies that store large amounts of personal information—including major players like Google and Facebook—will be required to disclose the types of data they collect, as well as allow consumers to opt out of having their data sold. Although the Act passed both chambers of the Legislature unanimously, its effective date is delayed for a year to permit lawmakers to make further refinements. See CC §§1798.100–1798.198 (added by Stats 2018, chap 55, effective January 1, 2020).

NO SOCIAL SECURITY NUMBER NEEDED FOR A BUSINESS LICENSE

To ensure that immigrants may apply for local business licenses, a new law requires local governments to accept a California driver’s license or identification number, an individual taxpayer identification number, or a municipal identification number in lieu of a Social Security number. Any personal information collected for purposes of issuing the business license may not be disclosed except to comply with a judicial warrant, subpoena, or court order. See Bus & P C §§16000.1 and 16100.1 (added by Stats 2018, chap 388, effective January 1, 2019).

NET NEUTRALITY LIVES ON IN CALIFORNIA… AT LEAST FOR NOW

This past year, the FCC repealed Obama-era rules requiring net neutrality (i.e., Internet service providers must treat all Internet data the same, regardless of its kind, source, or destination). In response to the FCC’s action, the Legislature enacted the California Internet Consumer Protection and Net Neutrality Act of 2018. Under the Act, internet service providers won’t be allowed to block or slow specific types of content or applications, or charge apps or companies fees for faster access to customers. Within hours of Governor Brown’s signature, the Department of Justice filed a lawsuit to block its implementation. Stay tuned! See CC §§3100–3104 (added by Stats 2018, chap 976, effective January 1, 2019).