Restrictive Covenants Enforced By Employers

Assembly Bill 747, if signed by Governor Newsom, will heavily impact the position of employers seeking to enforce any restrictive covenant in a non-compete agreement and the attorneys who advise them. Unfortunately, some issues remain unsettled between California’s appellate courts and its Supreme Court.

The bill before the State Assembly will, if enacted, add another set of teeth to the current penalties against employers and could instigate disciplinary actions by the State Bar against attorneys advising their clients on the current and unsettled issues.

The legal professionals at the Omni Legal Group, specializing in employment contracts in the Greater Los Angeles region, want business owners requiring non-compete agreements to be aware of the ramifications of AB 747.

The Ramifications of AB 747

If passed, AB 747 will impact employers operating within California’s state lines and those working across them. The aim of AB 747 is the employers’ enforcement of the restrictive covenants within a non-compete agreement.

As an overview, the effect of this bill would be:

• an additional penalty of $5,000 per person if harmed by the enforcement, or by any attempt to enforce, a non-compete covenant,
• a disciplinary action, including disbarment, taken by the State Bar against any attorney for presenting or attempting to enforce a non-compete covenant against any person, and
• the broadening of the definition of “non-compete” to include the engagement of any lawful trade, business, or profession.

In each of the above, a “person” can be an employee or a prospective employee.

AB 747 continues to carry out California’s public policy against enforcing non-compete covenants. The enforcement of such covenants will become narrower and more specific.

The Effective Ban on Covenants Not to Compete

Under California’s Business and Professional Code, non-compete clauses post-employment are void. However, this violation could become the basis of a claim for unfair business practices under the Code, but without a specific monetary penalty. The Code does provide for equitable relief.

The $5,000 per-person penalty is the added teeth to the damages relief.

California’s Labor Code

AB 747 would extend to the State’s Labor Code. Currently, an employee who primarily resides and works in California is offered a choice of law of another state that enforces restrictive covenants. This choice is available only if an attorney represents the employee during the negotiation of the agreement.

This exception to the Code is heavily relied upon by employees who work across or outside of the state. If AB 747 is enacted, the “attorney representation” clause would not be recognized if the employee was represented by an attorney selected or paid by the employer—even if the selection of the attorney was at arm’s length.

This limit on the choice-of-law provision would become effective for employment agreements entered into or modified on or after January 1, 2024.

The Non-Solicitation Clause

While non-compete clauses are typically a post-employment issue, there was a time when current or prospective employees clearly violated this covenant when soliciting employees or co-workers of prior employers.  These non-solicitation clauses were valid, definitive, and enforceable in California.

However, lower appeals courts have since held these clauses invalid. This issue remains unsettled as California’s Supreme Court has not addressed the disparity in court opinions. This is an unsettled issue. AB 747 could force the settlement by bringing the non-solicitation clauses into the same sphere as a non-compete covenant.

The Disciplinary Actions Against Attorneys

AB 747 could also be used against attorneys who advise or draft non-solicitation clauses in restrictive agreements. Effectively, the bill will extend beyond the actions of employers and reach the work of attorneys in representing their clients. Any disciplinary action by the Bar would hold even though the non-solicitation issue remains unsettled in the courts.

Take Action and Schedule a No-Cost Consultation With a Knowledgeable Los Angeles Business Litigation Lawyer Today

California is known for its liberal and progressive protection of individuals. Before 2018, employees agreed to non-compete agreements when appropriate consideration was given in exchange for restrictions on their livelihood. Now, this issue is moot.

AB 747 will broaden the unenforceability of non-compete covenants in the pre- and employment stages. Employers will be further limited in enforcing restrictive covenants and their legal representation of these issues.

If you are an employer and need legal advice on the effects of AB 747 on the current forms of employment and other proprietary contracts, please schedule a consultation with a highly reputable and experienced Los Angeles Business Litigation Lawyer by calling Omni Legal Group at 855.433.2226 or visit www.OmniLegalGroup.com to learn more.

Business Valuations and Trademarks: A Vital Connection

Business valuations are essential for understanding the worth of a company, particularly during mergers, acquisitions, or investor negotiations. While many financial and tangible assets are considered in this evaluation, one critical and often overlooked aspect is the value of trademarks. Trademarks, symbols, names, and logos that distinguish a business’s products or services, play an integral role in brand identity and can significantly impact a company’s valuation.

Trademarks represent the goodwill and reputation of a business. They’re not just aesthetic elements; they’re legal protections that give a company exclusive rights to a brand image or name within a particular industry or jurisdiction. This exclusivity can lead to consumer trust and loyalty, creating a strong brand that competitors find hard to replicate. Consequently, trademarks can add substantial value to a business, and their proper evaluation is essential in a comprehensive business valuation.

Valuing trademarks can be complex. Various methods can be employed, such as the “cost method,” estimating the cost of developing a similar trademark; the “market method,” comparing similar trademarks that have been bought or sold; and the “income method,” calculating the projected revenue attributable to the trademark. The chosen method must accurately reflect the trademark’s contribution to business profits, which may require an in-depth analysis of market position, customer recognition, and competitive landscape.

Trademarks’ intangible nature makes them challenging to value precisely. Unlike physical assets, their worth isn’t determined solely by intrinsic properties but also by external factors like market trends, consumer behavior, and legal protections. Additionally, a trademark’s value can change over time with shifts in consumer perception or competitive environment. Misjudging these aspects can lead to incorrect valuations, potentially affecting business decisions like sale price, investment evaluation, or strategic planning.

Business valuations are incomplete without considering the role of trademarks. These intangible assets encapsulate a company’s brand, reputation, and market position, and their valuation can often be as complex as it is crucial. Understanding the methods and challenges of trademark valuation, and engaging experts when necessary, ensures that this critical aspect of a business’s worth is accurately assessed. Whether selling, buying, or investing in a business, recognizing the value of trademarks provides a more comprehensive and precise picture of a company’s true worth.

Have Questions? Schedule a No Obligation Consultation with an Experienced Trademark Attorney in Los Angeles Today

If you have questions about strategies to properly monitor your trademarks, or you want to begin the process of registering a trademark, then it is imperative to work with a reputable and experienced trademark attorney in Los Angeles such as the professionals at the Omni Legal Group.  Omni Legal Group represents clients throughout the greater Los Angeles area, including Beverly Hills, Santa Monica, Culver City, and many others. For further information or schedule a no obligation consultation, please call Omni Legal Group at 855.433.2226 or visit www.OmniLegalGroup.com to learn more.

Understanding Bylaws: A Crucial Guide for Every Business

Whether you’re launching a new startup or revamping an existing business, navigating the complexities of the corporate world can be daunting. One term that often surfaces, especially in the realm of corporations, is “bylaws”. But what are bylaws, and is it crucial for every company to have them? Let’s delve into this often-overlooked aspect of corporate governance.

What Are Bylaws? At their core, bylaws are a set of internal rules and procedures that govern how a corporation operates. They can be seen as the internal manual or playbook for a company, outlining everything from the roles and responsibilities of directors and officers, to the scheduling of annual shareholder meetings, to the processes for amending the bylaws themselves. Bylaws cover a range of administrative details, such as the fiscal year of the company, the duties of different officers, how board meetings are conducted, and more. It’s important to note that bylaws are specific to the corporation and may not be the same as other governing documents, like operating agreements, commonly used for other business entities like LLCs.

Why Are Bylaws Important? Bylaws offer several vital functions for a corporation. Firstly, they provide clear guidance and structure, minimizing disputes or confusion about how decisions are made or tasks are performed within the company. By establishing clear procedures, bylaws can also expedite decision-making processes by setting forth rules in advance. Moreover, in many jurisdictions, having bylaws is a legal requirement for corporations, making it not just a matter of best practice, but of compliance.

Does My Company Need Bylaws? If your business is structured as a corporation, the short answer is likely “yes”. In many jurisdictions, corporations are required to have bylaws, even if they are not always required to file them with a state agency. Even in places where bylaws are not legally mandated, they’re still recommended. Bylaws preempt potential disputes and misunderstandings among stakeholders by providing clear-cut guidelines. If your business is an LLC or another structure, while you might not need “bylaws” per se, you will likely need a similar governing document, such as an operating agreement.

Bylaws are more than just a bureaucratic necessity; they’re an essential tool in shaping the culture, processes, and efficiency of your corporation. While the creation of bylaws might seem like a tedious task, they can save a corporation countless hours and potential disagreements down the road. If you’re in the process of forming a corporation, or if you’re part of one that doesn’t yet have bylaws in place, it’s wise to consult with legal counsel to ensure that your company has a strong foundation for future success.

Have Questions? Schedule a No Obligation Consultation with an Experienced Trademark Attorney in Los Angeles Today

If you have questions about strategies to properly monitor your trademarks, or you want to begin the process of registering a trademark, then it is imperative to work with a reputable and experienced trademark attorney in Los Angeles such as the professionals at the Omni Legal Group.  Omni Legal Group represents clients throughout the greater Los Angeles area, including Beverly Hills, Santa Monica, Culver City, and many others. For further information or schedule a no obligation consultation, please call Omni Legal Group at 855.433.2226 or visit www.OmniLegalGroup.com to learn more.

Navigating Intellectual Property Law in Business: A Critical Aspect of Success

In an increasingly innovative and digital marketplace, the understanding and application of intellectual property law have never been more crucial to business success. Intellectual property law protects businesses’ innovations, designs, and artistic works, safeguarding their competitive edge and offering an avenue for growth and profitability. But what exactly is intellectual property law, and why does it play such a pivotal role in modern business?

What is Intellectual Property Law?

Intellectual property law is a specialized area of business law that deals with protecting the rights of creators over their unique creations. These creations can range from inventions, designs, original works of authorship, to distinctive symbols, names, or images used in commerce. Intellectual property is usually divided into four main types: patents, trademarks, copyrights, and trade secrets. Each type offers specific protection, respectively covering new inventions, brand logos or names, artistic and literary works, and confidential business information.

Why is Intellectual Property Law Important to Business?

Understanding and correctly using intellectual property law can confer several benefits to businesses. Firstly, it offers protection against imitations and unauthorized use, ensuring that the value and profitability of the business’s unique products, services, or brand identity are maintained. Secondly, a robust intellectual property portfolio can significantly enhance a company’s value, attracting investors and possibly leading to increased funding opportunities. Lastly, it provides a legal framework for licensing, franchising, or selling these intellectual properties, opening new revenue streams for businesses.

Common Misunderstandings about Intellectual Property Law

Despite its importance, many businesses still have misconceptions about intellectual property law. For instance, some believe that having a domain name equates to having a trademark, which is not accurate. Others think that owning a patent in one country provides global protection, while, in reality, patent protection is limited to the country where the patent was granted. Hence, businesses must seek proper legal advice and take proactive measures to ensure they maximize the benefits while avoiding pitfalls associated with intellectual property rights.

Intellectual property law, in essence, can be a game-changer for businesses in the modern world. Its adept application fosters creativity and innovation, serving as a catalyst for growth, profitability, and long-term success. However, it is not without its complexities. Business leaders should prioritize understanding these laws or seeking professional guidance, thereby leveraging intellectual property as a potent strategic tool in their business arsenal. After all, in an era where innovation is king, intellectual property protection could well be the throne.

Have Questions? Schedule a No Obligation Consultation with an Experienced Trademark Attorney in Los Angeles Today

If you have questions about strategies to properly monitor your trademarks, or you want to begin the process of registering a trademark, then it is imperative to work with a reputable and experienced trademark attorney in Los Angeles such as the professionals at the Omni Legal Group.  Omni Legal Group represents clients throughout the greater Los Angeles area, including Beverly Hills, Santa Monica, Culver City, and many others. For further information or schedule a no obligation consultation, please call Omni Legal Group at 855.433.2226 or visit www.OmniLegalGroup.com to learn more.

LLC Vs. Corporation: Understanding the Differences

When you’re starting a business, one of the most critical decisions you’ll make is choosing the right business entity. The type of business entity you choose can impact your legal liability, tax obligations, and overall operational flexibility. Two of the most common choices are Limited Liability Companies (LLC) and Corporations. Both have their merits, but they differ fundamentally in several ways.

First, let’s explore the structures of these entities. An LLC is a business structure that combines elements of a partnership and a corporation. Its owners, called members, can be individuals, other LLCs, or corporations. An LLC is relatively easy to set up and offers a lot of flexibility in terms of management. It does not have strict requirements for holding annual meetings or keeping minutes. On the other hand, a corporation is a legal entity separate from its owners, known as shareholders. It can issue stock, has a structured organizational setup with a board of directors, and must adhere to more rigorous regulatory standards, including holding regular board meetings and maintaining detailed records.

Taxation is another critical area of difference between an LLC and a corporation. An LLC is a “pass-through” entity. This means that the company’s profits are not taxed at the business level. Instead, they “pass through” to the members, who report the income on their personal tax returns. This setup can avoid the issue of double taxation. Conversely, corporations are taxed as separate legal entities. The corporation pays taxes on its profits, and then shareholders pay taxes on dividends received, hence the term “double taxation.” However, some corporations, called S corporations, can elect to be taxed like an LLC to avoid double taxation.

The liability of owners also varies between an LLC and a corporation. Both structures provide limited liability protection, meaning that owners are typically not personally responsible for business debts and liabilities. But the extent of this protection can vary depending on state laws and how well the company maintains its corporate veil – a legal distinction between the company as an entity and its owners.

A unique feature that sets corporations apart from LLCs is their ability to raise capital. Corporations can issue shares of stock, making them more attractive to investors. This advantage makes corporations a better choice for businesses that plan to go public or seek funding from venture capitalists. In contrast, LLCs cannot issue stock and might face challenges in attracting large investors.

In conclusion, the choice between forming an LLC or a corporation depends largely on the specific needs and goals of your business. If you prefer a simpler, more flexible structure with pass-through taxation, an LLC might be right for you. If, however, you’re aiming for significant growth, plan to go public, or attract substantial investment, a corporation may serve your purposes better. As always, when making such critical business decisions, it’s wise to consult with legal and tax professionals to understand fully how each option may impact your venture.

Connect with us. Talk to an Experienced Trademark Attorney in Los Angeles Today.

Omni Legal Group represents clients throughout the greater Los Angeles area, including Beverly Hills, Santa Monica, Culver City and many other cities in Southern California. Our firm has a wealth of experience handling trademark appliances for all categories, and our Los Angeles trademark attorneys can help you register, file or answer any questions you may have regarding your trademark.

For further information or to schedule a consultation please contact Omni Legal Group at 855.433.2226 or visit www.OmniLegalGroup.com to learn more