Category Archives: Corporations in California

Nevada Employers Must Report Work Fatalities Within 8 Hours and Specified Events in 24 Hours: OSHA

Employers will now be required to report all work-related fatalities within 8 hours and all in-patient hospitalizations, amputations, and losses of an eye within 24 hours of finding about the incident, per a 2015 OSHA release. OSHA states, that “[p]reviously, employers were required to report all workplace fatalities and when three or more workers were hospitalized in the same incident.”

OSHA advises that, “Employers have three options for reporting these severe incidents to OSHA. They can call their nearest area office during normal business hours, call the 24-hour OSHA hotline at 1-800-321-OSHA (1-800-321-6742), or they can report online at www.osha.gov/report_online. For more information and resources, including a new YouTube video, visit OSHA’s webpage on the updated reporting requirements.”

The California Joint Venture License for Contractors Should Be Paired with a Written Joint Venture Agreement

Companies that lack the total expertise to bid on a local or State government contract in California can have the opportunity to bid under certain requests for solicitations and advertisements for bids.  Two or more companies can pair up to bid pursuant to a joint venture agreement, or even a teaming arrangement.

Typically the government customer will ask for a joint venture license prior to award of the contract as in this Alameda County bid advertisement.  What does a “joint venture license” mean?  This is a specific type of license issued by the California State Contractors License Board.  The CSLB indicates that, “[a] joint venture license may be issued to any combination of two or more licenses issued to sole proprietors, partnerships, corporations, limited liability companies, or other joint licenses”, and that “[t]he joint venture license may be issued in any classification held by at least one of the entities”.

As of the publication of this article the fee one must include with the application is $480.  Go here Applying for a Joint Venture License – Contractors State License Board for more information at the CSLB.

The license is not the only thing needed to make the “joint venture”.  Responsible companies will enter into a written joint venture agreement, usually drafted by legal counsel.   That agreement will specifically delineate who is responsible for what and how the arrangement will conclude.   Note that applying for the license does not mean you are properly set up as a joint venture as between the parties in the venture.

Be careful if one of the joint venturer contractors is suspended.  That affects the JV license.  California Business and Professions code states, “An active joint venture license shall be automatically suspended by operation of law during any period in which any member of the entity does not hold a current, active license in good standing.”  Cal. B&P C. sec. 7029.

This should not be taken as specific legal advice.  If you need legal advice specific to your situation or if you need a joint venture agreement drafted, please contact us by any means listed here.

A Limit on Creditor Control of the Nevada LLC

Nevada supports the survival of the LLCOne of the main reasons limited liability companies are formed is to limit the liability of the investors and operators of the company.  In Nevada, unless otherwise provided in the articles of organization or an agreement signed by the member or manager to be charged, no member or manager of any limited-liability company formed under the laws of the State is individually liable for the debts or liabilities of the company.  [NRS 86.371].

What about the reverse?  Can the company become liable or even controlled by a creditor of an individual member or manager of the LLC?  In other words, the individual member (or owner/investor) can incur debt outside of the operation of the LLC, debt which may have nothing to do with the LLC. Continue reading

Limited liability companies now authorized to hold California contractor’s license

CSLB Industry Bulletin – 01/27/2012

Contractors State License Board Issues First LLC License

SACRAMENTO -The California Contractors State License Board (CSLB) issued the first state contractor license to a limited liability company (LLC) on January 19, 2012, as part of the new business type that became eligible for licensure following the passage of Senate Bill 392 in 2010. The recipient is from the state of Washington: Doyon Project Services LLC, License No. 969358.

“To date, CSLB has received 36 LLC applications,” said CSLB Registrar Steve Sands. “However, our Licensing division has had to reject many because they were submitted without the correct information. We want to alert applicants to the errors we’re noticing so they can correct them before submitting incomplete application forms and causing a delay in their business operations.”

A common reason for rejection is the missing LLC registration number, which is issued by the California Secretary of State’s office (SOS). That number must be included on page one of the application. Companies should not submit the LLC application to CSLB until the SOS number has been issued.

Another common problem is that the personnel listed on the application do not match those reported by SOS. The same names and number of personnel listed on the application must match all of the personnel information provided to CSLB by SOS.

An issue related to the LLC personnel is that SOS has a four-month processing backlog for the Statement of Information (Form LLC-12) initial filings and updates, which are essential for reporting the LLC’s personnel (members and managers). CSLB cannot process the LLC license application until all information is consistent with SOS records. The personnel information is necessary for CSLB to determine the appropriate amount of required LLC liability insurance (between $1 million and $5 million, depending on the number of personnel).

Businesses that are planning to submit an LLC application to CSLB should plan for the four-month processing delay before submitting their application if they have recently submitted an initial or updated Statement of Information to SOS. However, SOS does offer expedited processing for an additional fee ($350 for 24-hour processing, and $750 for same-day processing—in by 9:30 a.m., out by 4:00 p.m.).

IT Options for Easing Litigation Hold for E-Discovery

We have been in the computer age for several decades now.  In most sizeable companies, a considerable amount of communication occurs in electronic format and is never printed onto a semi-permanent medium like paper.  Over the years, the courts have developed permissions for parties to discover this information during the course of the lawsuit.  No longer may a company hide its’ operations under cloak of electronic communication.

The federal courts were the first to adopt written standards for exchange of electronic information during discovery.  “Discovery” is a term meaning that stage of a lawsuit, or litigation, where all parties to the suit obtain access to relevant papers, information, physical objects, locations and witnesses pertinent to the issues in the case.  The reason discovery exists is so that everyone in the suit is accorded their procedural due process rights, as guaranteed by the U.S. California and Nevada constitutions.

Professionals in both law and technology converged to develop standards to give others in the lawsuit some sort of assurance that the party producing the information was indeed producing all of the information and had not deleted it.  Naturally the party asking for the information wants all of it, not just selected portions the responding party decides to reveal.  If the asking party had its’ way, the responding party would keep everything it ever did and never get rid of it.

As technology and the use of it expanded in commercial settings, companies began to realize how expensive and burdensome it is to keep all communications.  You hear some workers complain that they easily receive 200 emails per day.  Multiply that times the number of employees and one can see that data starts to build up, requiring physical assets, computers and servers to retain all of this data.  Companies began to want to delete stale data for the reason of expense and for security’s sake.

Enter the “litigation hold”.  The federal courts and the State of California developed law that requires a company who understands that they will be involved in litigation to put a “hold” on the destruction of electronic and other material that may prove relevant to the case.  In addition, now, parties, knowing they will likely enter into litigation, will ask the other parties to put a “hold” on destruction.

Electronic discovery or “e-discovery” or exchange of electronic communication is often very expensive on both sides and is not used in all litigation.  IT professionals are employed to do the exchange, and they all charges fees.  Reviewing the information obtained is very expensive because most of what is produced is not even relevant to the legal issues at hand.

Nevertheless companies are looking for inexpensive ways to manage e-discovery.  There are many vendors which provide services and products in this regard.

One of these is google.com.  The following indented text is from the google apps website:

Archiving and e-discovery tools for Google Apps

Compliance and e-discovery risks exist for organizations of all types today. A proactive strategy for managing these risks includes email archiving and search tools that allow organizations to respond quickly and effectively when the need arises. Google Apps customers can purchase archiving and search tools as an add-on product for Google Apps.

Archiving and e-discovery, powered by Postini, provides the ability to:

  • Allow administrators to search a centralized email archive
  • Set email retention periods for up to 10 years to comply with corporate policies
  • Implement litigation holds to preserve email messages
  • Identify and export email messages for further analysis & review

Archiving and discovery tools are available as an add-on for Google Apps for Business and Education Edition. If you are interested in purchasing Google Message Discovery, please contact sales.

If you are interested in standalone versions of Postini Services for your existing email server, please visit the Postini website.

Check out our “Archiving and discovery for Google Apps” datasheet for more information.

Archiving and e-discovery tools for Google Apps

As a service to our readers and clients, we wanted to pass on the google information.  Please use this service at your own risk and do your due diligence to assure yourself that this is the right service for you. Please note that we obtain nothing by way of providing this link or information.

Transferring California Contractor’s License from Individual Licensee to a Corporation Allowed Only if Licensee Owns 51% or More of Corp

If a 50% owner of a Nevada limited liability company (herein “LLC”) performing construction work in Nevada wants to obtain a California contractor’s license, can she simply take the California exam, get the license and then transfer the license to the LLC?  No, this will not work for two reasons.

First of all, the California State Contractors License Board does not license limited liability companies, foreign or otherwise.  It will only issue licenses to a sole proprietor, a partnership (also called a “copartnership”) or a corporation.  [Business & Professions Code section 7065].

Second, California law provides that no contractor’s license is transferable.  [Business & Professions code section 7075.1, subsection (a)].  By that it means licensees may not freely transfer, sell or assign their licenses to someone else without approval by the California State License Board.  However, under certain specific instances, upon application, the CSLB will reissue or reassign license numbers to certain people or entities.

When it comes to an individual wanting to have her license reissued to a corporation, the CSLB will only do it if the individual contractor licensee controls the corporation, i.e. control is having at least 51% of the ownership of the corporation.  [CSLB rules].  California law provides that the license may be reissued only if 1) the corporation is formed by an individual licensee and 2) the individual licensee maintains ownership directly or indirectly of shares evidencing more than 50 percent of the voting power.  [Business & Professions Code section 7075.1, subsection (c)(4)].  One can only assume that this law is in place to prevent investors from forming a corporation, and, essentially, “buying” a license by issuing only a limited number of shares of the company to an individual contractor licensee.

One solution to this is for the LLC to incorporate as a “C” corporation in their home state and qualify to do business with California’s Secretary of State, or to incorporate in California.  Then they may apply for a corporation contractor’s license with the California Secretary of State, and satisfy the new applicant rules.

An unlikely solution is for one of the owners of the LLC to buy out the other to the extent needed to achieve 51% or more ownership of the newly formed corporation.  The selling LLC owner would not likely do this.

For contractors seeking to do business in California, it is wise to seek legal counsel to help smooth the transition and avoid hassles with the California State License Contractors Board and the California Secretary of State.  Not doing the application correctly and not setting up the business entity in accordance with law can delay the process and cause the contractor to miss valuable bidding opportunities.