Legal issues and concerns affect every business, but not every business owner or manager has time to stay up to speed on what they need to know in the legal arena. There are headline-grabbing legal issues that demand immediate attention. There are also legal best practices concerns that require ongoing – at least annual – attention in a well-managed business. Take a minute to focus on some of the items that may be affecting your business now or that may be important for the future.
- Data Privacy. Data Privacy properly heads the list of legal concerns for businesses operating in California. The California Consumer Privacy Act (CCPA) takes effect on January 1, 2020. Many businesses have not yet given sufficient attention to the CCPA and the potential risks that it will bring even to companies that may not believe that they are collecting any consumer data. See https://www.hopkinscarley.com/blog/client-alerts-blogs-updates/data-privacy-law-client-alerts/ccpa-global-checklist…
- Independent Contractors. Many businesses have not re-visited their practices regarding the employee/independent contractor classification since the California Supreme Court’s landscape Dynamex decision in April 2018 (Dynamex Operations West, Inc. v. Superior Court), which significantly restricted employers’ ability to designate persons performing services for them as independent contractors. In September 2019, Governor Gavin Newsom signed into law AB5, also taking effect on January 1, 2020, that codifies, expands and creates exceptions to the Dynamex standard. See https://www.hopkinscarley.com/blog/client-alerts-blogs-updates/employment-law-client-alerts/beyond-dynamex-assembly-bill-5-codifies-expands-and-creates-exceptions-to-the-landmark-california-supreme-court-decision
- Cybersecurity. The ever-growing concern with cybersecurity risks is spawning increased attention from regulators and legislators. This translates to new requirements and compliance obligations for businesses. See https://www.hopkinscarley.com/blog/client-alerts-blogs-updates/data-privacy-law-client-alerts/californias-security-of-connected-devices-law-to-take-effect-january-1st.
- Harassment in the workplace. Throughout 2019, we have seen a constant stream of high profile cases of workplace harassment coming to light and leading to resignations, firings and lawsuits. Businesses need to be reviewing the adequacy of their anti-harassment policies and training programs.
- International business regulation. Businesses that are newly expanding from a primary focus on the US market to international markets need to address compliance with both US laws and foreign laws that regulate transnational businesses. Compliance with the EU’s General Data Privacy Regulation (GDPR) is a requirement in most instances. US export controls, anti-bribery and anti-money laundering regulations create new compliance needs for companies first entering international markets. Compliance with local laws and regulations drives a need for local counsel in each market entered, typically introduced to the business through the contacts and relationships maintained by their US counsel. Companies with established international businesses need to keep abreast of new legal-regulatory developments in each of their markets.
- Contract renewals (and terminations). Every year, contracts that are the mainstay of businesses – procurement, manufacturing, sales, distribution, services, facilities – expire or automatically roll over for another term – without anyone having looked at them, in some cases for years. A year-end contract review is an opportunity to consider terminating, amending or renegotiating contracts that may have grown stale over time. Attention can also be given to provisions in long-term contracts that may have been affected by new legal developments since the last review. For an example of a court case that could have a significant effect on existing contracts, see https://www.hopkinscarley.com/blog/client-alerts-blogs-updates/corporate-client-alerts/review-your-trademark-license-agreements-after-supreme-court-decision-addressing-rights-in-bankruptcy
- Liability shield. Businesses that are organized in a limited liability entity – i.e., corporation, LLC, or LP – need to take steps annually to ensure that their stakeholders – owners, investors and managers - continue to benefit from the limited liability shield. Best practices include compliance with legal formalities such as annual meetings or consents (in corporations) and separation of functions among related entities and individuals.
Businesses that have in-house legal departments rely on their in-house lawyers to bring up important legal developments and potential issues to management on an ongoing basis. Businesses without an in-house legal function need management that is attuned to the legal environment and watchful of legal developments that may affect the business. An outside general counsel (OGC) can assist CEOs and CFOs to maintain that constant awareness of the legal environment. The OGC should be counted on to recommend and to initiate actions in response to legal threats and opportunities that might otherwise be missed. Many of the lawyers in the H&C Corporate Department have extensive experience filling the OGC role for our clients. Contact us to learn more.
by Peter Stone