Should Your Business Avoid Having Workers Based In California?

By | Business Contracts, Business Lawyer | No Comments

california ab5 workers regulationsUnless your company already does business in California, you should avoid having workers based in that state.

Here’s why…

California AB 5  – Many Contractors are Reclassified as Employees

California Assembly Bill 5 (AB 5) essentially shifted the burden to business owners to prove a worker isn’t an employee. And made it hard to meet that burden.

The law provides in part, “a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The person performs work that is outside the usual course of the hiring entity’s business.

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”

Why is that important?

Because if you’ve got an employee working for you in California, you get all of the regulatory and tax baggage that comes with that.

If your company is located elsewhere, you get to register as a foreign entity doing business in California (and pay taxes accordingly).

You also are likely to get hit with penalties for the years you’ve been doing business in the state but didn’t register your entity.

Plus you’ll get to deal with employer withholdings for Social Security, worker’s compensation, unemployment compensation, and any “entitlements” the State of California decides to impose on your company.

At some point, you can expect California’s government to mandate you fill your management positions based on “social justice “ criteria unrelated to skill or performance.

Of course, the government also has no problem stopping workers at the drop of the hat for COVID-19. Who knows what the next reason will be to shutter business? And you can’t count on being exempt from whatever comes down either.

In short, it’s just not worth the downside of using California-based workers unless you’re already stuck in that trap by doing business in the state.

Exemptions From California AB5 For Some Workers

In September 2020, California’s Governor signed a new law that carved out exemptions for freelance writers and certain other workers (e.g. youth sports coaches) from AB5. It’s California Assembly Bill 2257 (AB2257)

But you can’t rely upon piecemeal exemptions like this to protect your company when it’s the policy of the state to loot your business (no matter where you’re based) in order to prop up a social welfare state that’s insolvent.

An experienced business contracts lawyer can help you avoid traps like the ones California sets by preparing the right type of worker agreements that protect your company. And advising you on business-friendly jurisdictions where it’s okay to get the workers you need.

Software Code: Who Owns It?

By | Software Agreements, Software Lawyer | No Comments

software code development and ownershipWhether you’re a developer or a business owner who pays for applications to be developed, it’s important to know who owns the software code.

Many software development agreements don’t properly address this issue. And often both developer and client each believes they own the code.

Sometimes it makes sense for the developer to retain copyright ownership while licensing the code to the client. This is particularly important where the developer plans to recycle the code on multiple projects for different customers.

On the other hand, a business owner may want proprietary rights to prevent development of competing applications. If this is the case, the owner may pay a premium to own the code. And perhaps license some rights to the developer for future non-competing use.

Of course, there’s also the issue of open source code (e.g. GitHub) and code that’s in the public domain (e.g. Unlicense). Because it’s common practice for software developers to “borrow” these to incorporate into a software application rather than reinvent the wheel.

If some of the code is open source, that needs to be disclosed so that the client knows the licensing limitations imposed on its use.

Similarly, if there’s public domain code in the new application, the client needs to know. For example, the application’s end-user license agreement (EULA) will need to address the use of open source and public domain code in addition to the proprietary code created.

Whether you pay for app development or are a developer, an experienced software lawyer can prepare the right legal documents that identify and protect your rights.

When Should You Pay Affiliates Commissions?

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

pay affiliates commissionsIf you have an affiliate program for your products and/or services, when should you pay affiliates after a commission has been earned?

It depends on your risk comfort level and the quality of your affiliates.

Affiliate Fraud

Unfortunately, affiliate fraud is a common issue. If you haven’t prescreened affiliate applicants before approving them to join your program, chances are you’re going to have multiple con artists gaming the system to increase their payouts by screwing you over and cheating other affiliates.

Refund Periods Affect When You Pay Affiliates Commissions

So, how do you protect yourself and the integrity of your program?

As a general rule, it makes sense to wait to pay out commissions until after the refund period expires.

Credit Card Fraud And Affiliate Commissions

Even then, you may want to wait longer (e.g. 30 days) beyond the refund period expiration to reduce the chance you get cheated by a credit card fraud scheme.

For example, a con artist affiliate might buy stolen credit card information off the Dark Web and use it to make a bunch of bogus purchases to “earn” affiliate commissions. It might take a while for the victims to realize their credit card info has been stolen and contact their card issuers to request the charges be reversed as fraudulent.

Suddenly you’re getting hit with chargebacks by Visa, MasterCard, etc. after the affiliate has been paid and disappeared. So, you’ve lost the money on the sales plus the affiliate commissions. And you’ll be getting angry emails and phone calls from the victims who believe you’re the one who cheated them (instead of the con artist affiliate).

Where To Get Help

An experienced Internet business lawyer can craft an affiliate program agreement that’s designed to protect you and reduce your risks when you pay affiliates commissions. The attorney can also prepare the right privacy policy, terms of use, and other website legal documents you need to minimize the legal dangers of selling products and services online.

3 Signs Your Website Privacy Policy Needs To Be Updated

By | Internet Lawyer, Website Lawyer, Website Legal Documents | No Comments

website privacy policy updatesTo protect themselves from lawsuits and government investigations, many business owners have their websites reviewed for legal compliance issues at least once a year by an experienced Internet lawyer. These reviews often result in privacy policy updates to reflect new laws and regulations.

Here are three signs your website’s privacy policy is stale, i.e. it’s not providing you the website legal protection you need.

1. European Union General Data Protection Regulation (GDPR)

If your privacy policy doesn’t address the EU’s GDPR, the policy is probably very outdated. Because the GDPR went into effect back in May 2018. The regulation needs to be addressed if your site has visitors from EU countries…whether or not you do business in the European Union.

2. California Consumer Privacy Act (CCPA)

California’s new privacy law went into effect on January 1, 2020 and started to be enforced on July 1, 2020. If you have California visitors to your website — regardless of where your business is located — you’ll want to make sure your site’s privacy policy either shows how you comply with the CCPA or explains why the CCPA doesn’t apply to your business.

Related Article: Privacy Policy 101: What Every Website Owner Should Know

3. Brazil’s General Data Protection Law (LGDP)

Following in the footsteps of the European Union, the Brazilian Lei Geral de Proteção de Dados Pessoais went into effect in August 2020. If you have website visitors from Brazil, your privacy policy should either address how you’ll comply with the LGDP or why the LGDP doesn’t apply to your business.

IP Blocking Instead of Privacy Policy Updates?

Don’t be tempted to try to circumvent these privacy laws simply by banning visitors from the European Union, California, or Brazil. Even blocking IP addresses won’t prevent someone from accessing your site using a Virtual Private Network (VPN). It’s easier to make privacy policy updates that protect you than to try to evade these laws by blocking Web traffic.

What to Do…

If you need help with privacy policy updates or other website legal documents, the first step is to book a phone consultation with Internet Lawyer Mike Young.