Winter Newsletter 2012

WHAT’S LEGISLATING?

A new proposed bill in California would prohibit employers from discriminating against unemployed candidates in the hiring process. This bill could potentially ban employers from advertising positions only to employed individuals. While employers want employees who have been consistently employed despite the recession, critics of the bill counter that the government should not tell businesses how to run their businesses.

RECENT DEVELOPMENTS

As of January 1, 2012, California has two new subtypes of business corporations- benefit corporations and flexible purpose corporations, both of which free their directors from having to manage the entity strictly for the economic benefit of shareholders, enabling them to address social objectives.

These corporations can obtain a certification known as “B” Corporations, a designation meaning that the corporations do not focus exclusive on shareholder profits and meet certain standards of social and environmental performance, accountability and transparency.

The charters of both benefit corporations and flexible purpose corporations expressly include social objectives among the purposes that they may pursue, even if the pursuit reduces the economic benefits provided to its shareholders. The directors of these corporations, however, have the freedom to pursue the creation of general public benefit any identified specific public benefit without concern that they will be accused of straying from the exclusive goal of creating economic benefits for its shareholders.

AB 1396 – Employment Contract Requirements

This new law restores employee protections that were invalidated by existing case law. It requires an employer who enters into a contract of employment with an employee involving commissions as a method of payment with an employee for services to be rendered within the state to put the contract in writing and to set forth the method by which the commissions are required to be computed and paid.

FEDERAL DEVELOPMENTS

A coalition of 80 institutional investors have publically supported of the Business Transparency on Trafficking and Slavery Act (HR 2759). This proposed legislation would require companies to disclose efforts to identify and address the risks of human trafficking, forced labor, slavery, and the worst forms of child labor in their supply chains.

Modeled after the California Human Trafficking and Slavery Law, which went into effect on January 1, 2012, the proposed federal legislation, unlike the California statute, is not limited to retailers and manufacturers. This legislation, if enacted, would apply to any publicly traded or private company with annual gross receipts exceeding one million dollars and currently required to submit annual reports to the Securities and Exchange Commission (“SEC”). Companies would be required to include the required disclosures in their annual reports to the SEC.