The California Department of Housing and Community Development distributes a weekly news update from various sources. This week one of the articles was entitled "Housing crisis needs California lawmakers to build consensus now." The opinion article is from the San Diego Union-Tribune Editorial Board, January 27, 2017.
Business is subject to not only the statutes passed by the California Legislature, along with the administrative regulations promulgated to further carry out the statute's "purpose" but also rulings from the California Courts related to statutes and regulations.
Business operations in California are regulation challenged as each year adds additional statutes and regulations. 2016 was no exception. The California Department of Industrial Relations through the Office of the Director on December 28, 2016 issued its summary of all of the new employment statutes effective January 1, 2017. To review the new employment laws, click here.
Business in California, as well as individuals, will see a drop in the California Sales & Use Tax in 2017. Diane Hartley, Board of Equalization, distributed a detailed explanation of the sales and use tax drop from 7.50% to 7.25%. In addition to the California Sales & Use Tax, local jurisdictions may also impose sales and use tax with the combination resulting in a tax higher than 7.25%.
Business owners have new financial accounting rules. As has been widely reported, the Financial Accounting Standards Board released new guidance on lease accounting. Under the new rule, all leases with terms in excess of 12 months must be included on the balance sheet-generally a right-of-use asset, and a liability equal to the present value of the payments over the term of the lease. Private companies and nonprofits must implement this standard for fiscal years beginning after December 15, 2019.
Courts have long acknowledged that misclassifying an employee as an independent contractor can be a costly slip-up for a business. In making this employee/independent contractor classification, the California Supreme Court has noted that employers may consider (i) whether the work is part of the hiring entity's regular business, (ii) the degree of skill required for the work, (iii) whether the worker provides his or her own tools and equipment, (iv) whether the worker maintains his or her own business, (v) the length of time of the job, (vi) the method of payment, and (vii) whether the parties believed that they were created an employment relationship. See Ayala v. Antelope Valley Newspapers, Inc., 59 Cal. 4th 522, 533 (Cal. 2014).
A "professional corporation" is a corporate form that may render its professional services through licensed individuals in a particular profession. See Corp. Code § 13405(a). In California, professional corporations may only be formed to render services in the fields of law, medicine, dentistry, and accountancy. Thus, professional corporations are also subject to the regulation of the state agency that provides oversight over those professions. For example, a professional corporation formed for the special purpose of practicing dentistry would be subject to the regulation of the Dental Board of California. Similarly, a law corporation, as they are sometimes referred to, would be subject to the regulation of the State Bar of California.