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When you begin the hiring process, you often have one goal in mind: to find the right talent for your business. You want employees you can trust to meet consumer needs and uphold your business’s values. Of course, there are other elements to this process than finding talent. There are many rules you must follow. One of the most critical issues that you must remember is that legal protections apply to job candidates as well – not just your employees. LAWSUIT HIGHLIGHTS POTENTIAL RISKS OF IGNORING HIRING RULES Although this case is in Oregon, the theory applies to business owners here in California too. AP News reports that Viewpoint Construction Software and CampusPoint Corp. are now facing a lawsuit from a candidate who is deaf and whom they refused to hire in 2018. According to the lawsuit brought by the Equal Employment Opportunity Commission (EEOC), the companies: Refused to provide reasonable accommodations in the form of an American Sign Language interpreter for an interview; and In turn, did not hire this candidate because of their disability. Both of these actions are in direct violation of the Americans with Disabilities Act (ADA). We have discussed the importance of complying with these laws in previous blogs. However, it bears repeating that businesses could face discrimination charges from current employees, but also potential candidates. Remember: while candidates do have to meet the qualifications for the job posting, their disability cannot play a role in any hiring or employment decisions. WHY IS IT CRITICAL TO POINT OUT THIS ISSUE? As the focus on promoting diversity and inclusion in the workplace increases, business owners need to recognize that they cannot overlook accessibility. Unfortunately, Forbes reports that accessibility is often the aspect of inclusion that gets lost in the mix. Business owners must make sure they stay ahead of the game when it comes to complying with the ADA and creating an accessible workplace for consumers, employees and candidates. To accomplish this, it can help to: Evaluate hiring processes, as well as internal processes for accessibility; Identify issues or disparities in hiring and take time to resolve them effectively; and Consult experienced business counsel about legal protections and requirements. No business owner wants to face accusations of employment discrimination. Therefore, it is critical to take steps now to improve accessibility measures in the hiring processes

You know that your business’s success depends on both external and internal factors. The external factors of the public image and financial success combined with the internal factors of the company culture and workplace environment help a business thrive. Lately, company culture has become a hot-button issue sparking concerns of legal violations prompting costly litigation. WHAT IS HAPPENING IN THE ACTIVISION BLIZZARD DISPUTE? By now, you’ve probably heard about the lawsuit against Activision Blizzard – the gaming and tech giant and creator of some of the most popular online games – for accusations of a toxic and hostile work environment. Employees filed complaints alleging: Discrimination Sexual harassment Unequal pay Retaliation Now, the California Department of Fair Employment and Housing (DFEH) is involved. DFEH filed a lawsuit against the gaming company for violating state employment laws. As CNN reports, this lawsuit has been copied by employees against their employers across the country and has led to a crackdown on other tech companies. COMPANY CULTURE IS OF THE UTMOST IMPORTANCE The case against Activision Blizzard is not nearly the first involving issues in a company’s culture and won’t be the last. Movements like #MeToo and even the transition to working remotely all placed emphasis on company culture – and its significance is only increasing. Your business’s success could boil down to your company’s culture and making sure it complies with the law. Therefore, it is critical for business owners and employers to take responsibility and take steps to build a positive company culture. WHAT SHOULD YOU DO? Concentrating on improving – and maintaining – the culture can be an important and proactive step to reduce that risk. As a business owner and employer, be sure to: Consider all of the factors influencing your company’s culture Open lines of communication with employees to gain their perspectives Implement creative solutions to foster a good company culture long-term Creative strategies are essential, as the business world is everchanging. You must be ready to change with it to protect your company.

There are many reasons that entrepreneurs and business owners enter into partnerships. The collaboration, shared responsibilities and different perspectives that partnerships offer can be incredibly valuable in the business world. However, studies report that nearly 70% of business partnerships fail. After all, disputes between partners and failed partnerships can not only put friendships at risk, but also the entire investment into the business. Why is the statistic of failed partnerships so high? Disputes certainly play a large role in partners’ falling out, but the reasons behind the failures might surprise many business owners. WHAT ARE THE COMMON REASONS BEHIND FAILED PARTNERSHIPS? Entrepreneur recently reported on some of the most common reasons partnerships fail. These reasons are so surprising since many of them do not stem from within the business, but from external, personal factors. For example, the list states that business partnerships frequently fail because: Business partners are at different stages in their lives Partners do not share the same level of motivation The level of dependence on the other partner is unequal There is a lack of trust between partners These factors may be personal, but they affect the business in significant ways. Consider the matter of trust. Business partners should have a very high level of trust in each other as they embark on a financial and commercial investment. If they don’t, that only increases the chance of a dispute over business matters. Some might say that involving personal matters is what puts business partnerships at the greatest risk of failure. However, the reasons listed above seem to indicate that partnerships require a healthy balance of both professional and personal compatibility. Striking that balance is not only important for success but also to avoid legal risks. PARTNERSHIP AGREEMENT: PLANNING FOR THE WORST IS PRACTICAL – AND CRITICAL The effects of a failed partnership are not only financial. They frequently lead to legal risks as well, including: Internal risks, whether it is a breach of contract or violation of the partnership agreement. External risks, if the dispute leads to breaches of agreements with suppliers or shareholders. That is why it is critical to thoroughly vet a potential partner long before establishing a partnership. It is equally important to have a comprehensive partnership agreement that will address such critical issues as the: responsibilities of each partner; apportionment of expenses and profits; procedures to address disputes; and dissolution of the partnership.

It seems that nowadays, tech companies face risks from all directions. With claims that companies violated labor laws or breached antitrust laws, many companies in Silicon Valley frequently make national headlines nowadays. And a recent case could lead to another wave of lawsuits, as well as a new kind of liability for tech companies. WHEN CONSUMERS MISUSE PRODUCTS, COMPANIES ARE NOT USUALLY RESPONSIBLE Companies often face liability claims, but many do not go far since companies cannot be held responsible for consumers misusing products. That is one of the primary reasons why it is critical for companies to: Test products and manage risks effectively Provide appropriate warnings to consumers Tech companies take these precautions as well, though they have additional protection through Section 230 of the Communication Decency Act. Section 230 is what protects tech companies and online platforms from facing liability for what users post. It’s one of the fundamental laws regulating the internet and social media platforms. IS A RECENT CASE AGAINST SNAP INC. A TURNING POINT? The popular app Snapchat is at the center of a controversial and complex case. Plaintiffs state that the design of the app – particularly, one of the apps many filters – encouraged misuse and reckless behavior that led to the death of three boys. The filter in question marks the speed at which users are driving, which led to the fatal high-speed crash. However, a federal court of appeals determined that the parents of the three boys can sue Snap Inc. – despite Section 230. And according to National Public Radio (NPR), the case against Snap Inc. could: Lead to more cases challenging tech companies and their platforms Set precedents for cases specifically targeting Section 230 Whether or not these particular worries come to fruition, the challenges to tech companies and Section 230 will likely continue. And business owners must be prepared. WHAT CAN BUSINESS OWNERS DO? Tech companies must conduct frequent reviews and upgrades of their products, whether they are apps or gadgets. It is often beneficial to have teams dedicated to identifying potential risks and troubleshooting them proactively. Additionally, regulations in the tech industry are ever-changing. And California business owners must be ready to change with them to be successful. Business owners must stay on top of these changes, and implement the necessary modifications to mitigate risks.

In 2019, California gained national attention when state lawmakers signed Assembly Bill 5 into law. And the response to the law was quick. Several companies – namely Uber and Lyft – objected to the regulations. The dispute over AB 5 continued until last November. Then, Californians passed Proposition 22 to exempt the gig rideshare companies from the classification regulations. However, passing the proposition did not put an end to disputes for a number of gig companies. GIG COMPANIES CONTINUE TO GRAPPLE WITH LAWSUITS CNN reported that Proposition 22 would benefit gig economy companies. And yet, several of these app-based businesses are still facing legal issues regarding worker statuses. Why do these disputes continue? Reports state that Proposition 22 does not cover all gig companies the same. While it exempts Uber and Lyft, it still holds several other gig companies to the strict conditions. Bloomberg reports that several gig companies are currently facing lawsuits in California, including: Handy Technologies Inc. TaskRabbit Inc. Rover Inc. Lime There is no doubt that these lawsuits pose a considerable risk to the businesses. Many of them face a double threat from workers filing claims and district attorneys. The report from Bloomberg said that the continuation of these lawsuits could put gig companies at risk of surviving operation, even aside from legal concerns. BUSINESS OWNERS MUST BE MINDFUL The gig economy continues to grow, especially in the current circumstances. But as it grows, so do the potential hazards businesses face in the legal landscape. Gig companies already face a wide range of legal issues, including: Occupational health and safety concerns Labor and pay disputes Contract disputes And, of course, worker status disputes. The gig economy is not anything new to the business world. But in this era of increasing regulation, business owners must take great care to build strategies that protect their business’s operation. There is still plenty of pushback against the effects of AB5. Even so, business owners should ensure they comply with the necessary laws and carefully examine their workers’ statuses to avoid such lawsuits.

Regardless of the company’s size, business partners frequently believe that a 50/50 partnership is the fairest and most effective arrangement. That way, they both maintain equal power and say over the direction of this shared dream and effort. Even so, every 50/50 partnership carries the risk of deadlock. Most business owners are familiar with this issue, when two business partners cannot agree on a decision and, in turn, cannot move forward. This can have a considerable impact on the business as a whole, especially if these decisions are strategic or financial. So, how should business owners approach a deadlock? ALWAYS REFER TO THE PARTNERSHIP AGREEMENT IN DEADLOCK As we have discussed in previous blog posts, it is often in California business partners’ best interests to establish a partnership agreement. Having written agreements partners can refer to is critical, and typically address: Dispute-resolution strategies Process in the case of deadlock Therefore, the importance of potential partners to have an attorney draft a fair, and complete partnership agreement cannot be over-emphasized. Similarly, partners should always consult the partnership agreement to determine how to move forward in the event of an impasse. COMMIT TO NEGOTIATING – AT LEAST IN THE BEGINNING By the time business partners reach a true deadlock, they have often attempted to negotiate. Even so, business partners should still attempt to negotiate a solution again before turning to litigation. It is often helpful to negotiate in a formal setting with an experienced business attorney or another neutral third party. Most business partners do not want to put their shares, ownership or business in jeopardy. Additionally, taking matters to court is often the last thing that business partners should do. TWO CRITICAL REMINDERS WHEN DEALING WITH DEADLOCK Regardless of how business partners approach deadlock or even a minor dispute, they must keep two things in mind throughout the process: They must always put the interests of their business first They should try to remain professional at all times These reminders might be unnecessary, but they always bear repeating. Putting the business first can often help partners find a solution that can work for the whole business as they move forward.

In many cases, the resolution of a business lawsuit frequently ends in a settlement. Regardless of how business owners approach resolving the legal dispute, the parties will lay out the terms of their resolution in a settlement agreement. California business owners should treat this document like they would any other agreement and must therefore make certain that it contains all the terms it needs, and resists terms that could be adverse to their business. WHAT ALL BUSINESS OWNERS MUST DO BEFORE THE SETTLEMENT Many business owners want to put the legal dispute behind them, but they must take time to look over (or preferably have their attorney draft) the settlement agreement carefully. There are three things that business owners should confirm in particular: The language is not ambiguous: Business owners should review the document’s language to make sure it does not include ambiguous statements. The agreement and settlement should be clear to both parties. In these cases, it is often beneficial for business owners to review the document with an experienced business attorney. The agreement addresses all legal claims: It is common for business owners to use a template to outline their settlement agreement. When this happens, they might lose track of the original claims during the negotiations. Business owners should make sure the settlement agreement discusses all of the relevant details of the claim. It clearly explains the terms of the settlement: Business owners must pay attention to detail when establishing the terms of the settlement. There can be a long list of terms. For example, many business owners include a confidentiality clause that prevents either party from discussing the matter or disclosing details. These terms may have a long-term effect on the business, so business owners must consider them carefully and ensure they are correct. Generally, business owners can rely on their attorney to reduce risks and ensure the settlement agreement is fair and correct. However, it is still important for business owners to understand the important details their settlement agreement should include, so they can protect their business.

It can never be said enough – employers must always make sure they stay on top of any changes to employment laws. When they are up to date, they face a lower risk of non-compliance. Unfortunately, this can be a complicated task, as changes and revisions are frequent in this area of law. And California lawmakers recently made a couple of changes to the law that will greatly affect the manner in which employee disputes are resolved. TWO RECENT BILLS THAT CHANGED THE LAWS In 2018, California passed Senate Bill 820, the STAND Act (Stand Together Against Non-Disclosure Act), in response to the #MeToo movement.  SB 820 prohibited the use of confidentiality provisions in settlement agreements where the underlying claims were based upon sexual assault, sexual harassment, and workplace harassment or discrimination based on sex. The law did not extend to claims based upon other protected characteristics. Therefore, a confidentiality provision in a settlement agreement could not prevent an individual from discussing the factual information related to sexual harassment or sex discrimination allegedly experienced in the workplace, but could preclude an individual from discussing factual information related to harassment or discrimination based upon any other protected characteristic (e.g., race, age, gender, etc.). Last year, Governor Newsom signed Senate Bill 331, known as the “Silenced No More Act” into law which expands Civil Procedure Code Section 1001.  The Act went into effect on January 1, 2022 and applies to agreements entered into beginning on January 1, 2022, and is designed to prevent employers from including nondisclosure agreements (NDAs) in any settlements or agreements with employees who experienced any form of discrimination. The Silenced No More Act expands the provisions in the 2018 STAND Act to broadly prohibit confidentiality provisions in settlement and separation agreements involving workplace harassment or discrimination on any protected basis (i.e., harassment or discrimination based on race, religion, color, national origin, ancestry, disability, medical condition, familial status, gender, age, and all other protected characteristics), not just sexual harassment or sex. It also requires non-disparagement agreements to contain specific language advising the individual of those rights. CONFIDENTIALITY IN SETTLEMENT AGREEMENTS SB 331 leaves in place the prior law’s provisions protecting the identity of the claimant.  Specifically, if the claimant requests a provision protecting the claimant’s identity and any facts that could reveal the claimant’s identity, a confidentiality provision is lawful so long as a government agency or a public official is not a party to the settlement agreement. NON-DISPARAGEMENT AGREEMENTS SB 331 also expands Government Code Section 12964.5, which now makes it unlawful to include any provision that prohibits an employee from disclosing information about any type of harassment or discrimination or other conduct that an employee reasonably believes is unlawful in the workplace unless the agreement includes the following carve-out language in substantial form: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” SEPARATION AGREEMENTS SB 331 also expands these requirements to any agreement related to a current or former employee’s separation from employment.  Any such separation agreement must provide: (1) notice about an employee’s right to consult an attorney, and (2) reasonable time (at least 5 business days) for the consultation with an attorney.  If an employee wishes to accept the agreement before the end of the 5-business-day period, it must be “knowing and voluntary” and not a result of improper inducement by the employer.  This requirement does not apply to a negotiated agreement to resolve an underlying claim filed by an employee in court, before an administrative agency, in arbitration, or through an employer’s internal complaint process. OTHER CONSIDERATIONS Like SB 820, SB 331 allows the settlement or severance amount paid to remain confidential.  It also permits confidentiality provisions in releases and agreements that aim to protect the employer’s trade secrets, proprietary information, or other confidential information that does not involve unlawful acts in the workplace. CONFIDENTIALITY PROTECTS THE BUSINESS, BUT STRATEGY IS ESSENTIAL Generally, if employers deal with disputes or complaints regarding discrimination, they attempt to use confidentiality agreements or NDAs to safeguard the business’s best interests. As we have discussed in previous blog posts, issues like this in the workplace can quickly spiral and cause significant damage to the business – regardless of how the employer handles the complaint. However, the intent of using them may not always match the effect they have. Employers must be strategic when it comes to using NDAs, including: Determining when they will use them, such as specifically protecting intellectual property When embarking on a new venture or partnership When working with third parties in consulting

Infringement on your brand or trademark is not the only way your brand could be put in jeopardy. You may well know that any form of litigation could put your brand at risk. And as we have seen in the last few years, it does not take much for one issue to affect a brand’s image and lead their reputation to suffer. As a business owner, you must also be aware of specific risks your brand could face – and where they come from – so you can effectively mitigate the impact of these risks. FOUR PARTIES BUSINESS OWNERS MUST ADDRESS The threat to your brand stems from the particular lawsuit, naturally. However, this threat can have a powerful ripple effect. Many of these risks arise in the digital world. However, whether the threats are online or not, many of these consequences center around the business relationships you maintain, including with: Consumers: This one is a commonly known risk. When brands face backlash from a lawsuit, consumers will often stop purchasing goods or services from the company. In turn, this can lead to a sharp reduction in profits. However, as we have discussed in previous blog posts, consumers often take to social media to criticize the brand as well. Business partners: Partnerships with other businesses may also suffer. To protect their own brand, they might try to disassociate with your business as soon as they can. Deals can fall through, and contract disputes could result. Investors: Shareholders and investors in your business might also take action when the brand is in jeopardy. For example, as we discussed in a previous blog post, shareholders filed a derivative lawsuit against the social media company Pinterest when the brand started to suffer from the other legal actions they faced. Employees: Both former and current employees might also try to distance themselves from your brand in the face of litigation. For example, current employees might disengage from operations or even resign. This can lead business to suffer even more. Mitigating the effects that a lawsuit could cause your business is already a priority, but California business owners must make sure they confront these four risks head-on and secure these important relationships. BEWARE: THESE PARTIES CAN MULTIPLY LITIGATION RISKS Any dispute or public complaint can reflect on the brand – regardless of whether it is a former employee’s claim to the Equal Employment Opportunity Commission, or a business partner’s accusation. One issue can quickly spiral, and all four of these parties could add to a business owner’s stress by taking legal action. When these cases multiply, the brand you worked so hard to build could suffer even more. That is why business owners must be vigilant in their strategies to protect their brand, whether or not they face litigation.

Companies of all sizes face the risk of antitrust litigation, though the risk substantially increases the larger a business becomes. Business owners must be acutely aware of the antitrust laws regulating their business practices. However, they must also be aware of where this risk comes from to mitigate it. BACKGROUND In the United States, antitrust law is a collection of mostly federal laws that regulate the conduct and organization of businesses to promote competition and prevent unjustified monopolies. The main statutes are codified in three Acts – the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. WHO CAN FILE ANTITRUST CLAIMS? There are three parties who generally can file antitrust claims against a business: The government: The Federal Trade Commission or state governments could take actions against a business for violating competition laws. Sometimes, state governments and attorney generals will join forces in a class action against large companies. Competitors: If competitors in the same industry claim they have evidence of antitrust actions, they could also file a claim against the company. Former employees: In some cases, former employees might also file class-action antitrust lawsuits. For example, in 2019 one such lawsuit stemmed from a 2019 case where several companies had violated antitrust laws by agreeing not to poach employees. In addition, consumers can file antitrust lawsuits as well. One of the main risks companies face is the escalation of these cases. For example, one competitor might file an initial complaint, but more might join in. EXAMPLE – AMAZON FACING CONSUMER-LED ANTITRUST LAWSUIT Long before it held the reputation of the largest online retailer, Amazon mainly focused on selling books – both hard copies and e-books. The company has branched out over the years, but this line of business is causing current trouble for the company. Business Insider reports that Amazon customers filed a lawsuit claiming that the company worked with large publishing houses behind the scenes to increase the price of e-books. According to the report, Amazon made agreements with these publishing houses that included “most favored nation” clauses. Essentially, these prevent the third-party from listing lower prices on their products on competing sites. This is not the only antitrust action Amazon is facing. The company is also involved in the federal government’s lawsuit against several large tech companies claiming they are controlling the digital market. Accusations and lawsuits like this can escalate and multiply quickly. Business owners must take care to respond to these claims effectively as soon as they arise.

There is no denying how important diversity is in the business world, and current events have only placed even more emphasis on this matter. Many sources, from Forbes to the Harvard Business Review, stress the need for diversity and provide business owners with tips and resources to improve inclusion in their businesses. However, California lawmakers have taken it a step further. AB 979 REQUIRES REPRESENTATION ON CORPORATE BOARDS In a previous blog post, we discussed the state law enacted in 2018 requiring companies to include women on their board. While this law faced pushback from several business owners, lawmakers passed a new addition to this law in 2020. Assembly Bill 979 expands the requirements for representation on corporate boards. Within the bill, lawmakers identify several disparities that exist within the business world. The goal of this law is to reduce those disparities. Therefore, by the end of 2021, this law will require publicly held companies in California to have at least one board member from underrepresented communities. The law specifically states this refers to anyone who identifies themselves as: Black African American Hispanic Latino Asian Pacific Islander Native American Native Hawaiian Alaska Native LGBT Depending on the number of directors or board members, companies will have to meet different conditions and numbers under the law. Business owners must file the information about their board members with the Secretary of State to confirm that they meet the requirements under the law. Failing to comply with the terms of the new law can lead to significant financial penalties for businesses. WHAT SHOULD BUSINESS OWNERS DO? Take steps to comply with this law. Even though it currently faces pushback and legal challenges, it is still critical to be proactive in these matters to avoid potential penalties. Regardless of the new law, however, it is a good idea for business owners to review the job descriptions, recruiting practices and policies laid out for the board of directors to: Ensure that the board maintains the best interests of the business Understand how diversity could improve and help their business Improving diversity on the board of directors has many benefits for businesses at many levels. The combination of different perspectives and experiences is always valuable in the business world, and business owners should reevaluate their goals regularly as they move forward to make sure they safeguard the future success of their business at all levels.

While business owners strive for success, they must also make sure they adhere to state and federal regulations on competition. No matter the size or kind of business, it is important to avoid any action that could be construed as violating antitrust laws to avoid serious long-term legal issues or penalties as illustrated by a recent landmark case against Facebook. FIRST: WHAT IS THE PURPOSE OF ANTITRUST LAWS? The federal government enforces antitrust laws to ensure fair competition across all industries in the business world. These laws prevent companies from: Fixing prices of their products or services Arranging bids for contracts or other business deals Engaging in exclusionary or unfair tactics that force competitors’ hands GOVERNMENT FILES ANTITRUST LAWSUIT AGAINST FACEBOOK There is a long history of companies facing antitrust lawsuits in the United States. While they are not as common as many other legal issues businesses could face, antitrust actions can have much larger consequences. In December of 2020, the U.S. government made waves in the business world when it filed an antitrust lawsuit against the social media giant Facebook. The federal lawsuit, in addition to a lawsuit involving 46 states, claims that Facebook is stifling competition in the tech and social media world, using tactics to specifically damage competitors. This is an effect of the larger inquiry into the world of tech business as a whole, as the government investigates how companies like Amazon, Apple, Google and now Facebook impact the market in this industry. WHY SHOULD BUSINESS OWNERS TAKE NOTE? The effects of this case could be monumental on the tech world – and the business world as a whole. It could: For Facebook namely, result in an order to break up the company Impact the limits of tech start-ups, according to CNN Set a precedent for antitrust issues for tech companies, which in this developing industry is an often-complex matter Lead to additional regulations for consumer privacy, on top of those outlined by the new California Privacy Rights Act (CPRA) Even business owners who do not operate in the tech sector should ensure they are aware of the risks such a lawsuit – and the particular outcome of this action – could pose to the future of the business world.