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From our colleagues Lucas V. Muñoz, Margaret Keane, Ben Gipson and Daniel Lac

Beginning July 1, 2015, employers in the State of California are required to provide employees with paid sick leave (PSL) under the California Healthy Workplace Healthy Family Act of 2014. In short, every employee who works at least 30 days in a year is entitled to accrue PSL at a rate of at least one hour of PSL per 30 hours worked, up to 24 hours per year.

Simple enough? Not really. As employers implement…
Continue Reading IMPLEMENTING CALIFORNIA’S PAID SICK LEAVE LAW: 10 ACTION ITEMS

Contributed by our colleague Mark Radcliffe

2014 was a great year for startups seeking funding.  Two of the leading reporting companies, PitchBook and CB Insights, report similar trends (both of these reports focus on funding by traditional financial venture capitalists and corporate venture capitalists, but the numbers differ because PitchBook also includes some angel investments). The key points are:

1.  Significant Increase in the Amount of Funding:  The funding in 2014 increased dramatically from 2013: according to PitchBook,  funding increased almost $20 billion from $39.4 billion to $59 billion…
Continue Reading Three Trends in 2014 Venture Capital Funding

A useful note from our colleague Sanjay Beri, originally posted at Technology’s Legal Edge.

I was recently reminded that the term “reseller” agreement can often mean different things to different people.  Misunderstandings about these types of relationships creates the potential for miscommunication and wasted time drafting the wrong terms.

A client recently asked me for a form of reseller agreement to engage resellers to help distribute the client’s software based product.  “You know, just grab something off the shelf that will work” went the common refrain.  As I talked…
Continue Reading What Exactly Do You Mean By “Reseller” Agreement?

From our colleagues Paolo Morante, Steven E. Levitsky, and Laura Kam

In accordance with the 2000 amendments to the HSR Act, the Federal Trade Commission has announced its annual revision to the jurisdictional thresholds under the Act. The new thresholds will go into effect 30 days after publication in the Federal Register, which is expected in the next few business days.

Under the new thresholds, no transaction will be reportable unless, as a result of it, the acquiring person will hold voting securities, assets, or noncorporate interests of…
Continue Reading FTC ANNOUNCES ANNUAL REVISIONS TO HSR ACT THRESHOLDS

From our colleagues, Michelle J. Anderson and Jim Halpert, originally published as a Data Protection, Privacy and Security Alert (US)

According to the Data Quality Campaign, 36 states considered 110 student data privacy bills in 2014, and 20 states enacted 28 such bills into law.  At least eight of these new laws may have significant implications for businesses that provide services involving student data to schools, and most of these laws have already taken effect.

IMPLICATIONS FOR VENDORS: Some of the new state student privacy laws specifically require…
Continue Reading New student data privacy laws: top points for school contractors and K-12 education sites, apps and online services

From our colleague, Ute Krudewagen

The CEO of an emerging growth company called me a while ago, a bit shocked after having seen the employment contracts that had just been issued to a couple of new hires in Hong Kong.  “How could they be longer than mine!?  Are you sure that is the approach we should take as we expand our operations?”

This CEO, like many US executives, employment lawyers and HR representatives, is accustomed to one- or two-page US-style at-will offer letters. But in many jurisdictions around the world,.
Continue Reading Top 10 Pitfalls in Managing Employment Contracts as You Go Global

Employers, from startups to public companies, need to be aware of the following requirements and take action by January 31st if they apply.  Section 6039 of the Internal Revenue Code requires a corporation to furnish a written statement to any employee or former employee who either (i) exercised an incentive stock option within the meaning of Section 422 of the Code (ISO) during 2013 or (ii) during 2013 first transferred legal title to shares acquired under the corporation’s employee stock purchase plan within the meaning of Section 423 of the…
Continue Reading Employers: 2014 Deadlines to Furnish ISO and ESPP Information Statements and Returns

Our colleague Ute Krudewagen has put together a list of some key labor and employment issues to consider if and when you decide to take your US-based emerging company to overseas locations.

So you are ready to expand?

Your start-up is off the ground and running, U.S. offer letters and confidentiality agreements have been signed and compliance policies have been implemented.  It’s now time to hire your first employee outside the U. S.  This seemingly easy task is often easier said than done.  For many emerging companies, the road to a global workforce is paved with potholes.  How can you prepare for the Friday afternoon call from a frantic HR manager who wants to hire a salesperson who will go to a competitor if he doesn’t have an offer in his hands by Monday morning?  Can you afford to lose the candidate, and all the great opportunity that the candidate represents to the business?  How do you respond when asked about a sales representative who received an offer three months ago and has since then been working in Brazil, while being paid directly from the U.S.?  These issues are part of running an international business, however, with the right preparation and planning, these speed bumps can be leveled before they escalate.

The five issues Ute discusses for growing employers to consider before going global are:

  • Doing Business and Tax Considerations, Including Corporate Structure
  • Will you Expand by Hiring Employees, Independent Contractors, Third Party Agencies or Expatriate Employees?
  • Payroll & Benefits Processes and Costs, Including Witholding on Taxes and Social Charges (similar to Social Security)
  • Employment Agreements & Policies
  • Managing the Exit Strategy – Probationary Periods, Lack of At-Will Employment, Notice Periods and Severance

Continue Reading Top Labor and Employment Law Issues When Taking your Start-Up Global

CONTRIBUTED BY
Trent Dykes, Megan Muir and Kiran Lingam (guest contributor from SeedInvest)

I. Introduction / Background

With the passage of the JOBS Act, the regulation governing most private securities offerings is undergoing a dramatic makeover. Congress tasked the Securities and Exchange Commission (SEC) with developing new rules allowing companies to generally solicit funds, subject to restrictions as determined by the SEC. In July 2013, the SEC issued final rules on this topic and also proposed additional rules that are not yet final. Managers of incubators, accelerators, angel groups and others involved in startup capital raising have expressed great concern about how the revised regulations will affect them, particularly with respect to their public-facing events.

Whether presenting at a demo day event, angel group meetings or business plan competitions constitutes “general solicitation” is a question that has caused great concern among many angel groups, incubators and other event organizers around the country. This post is designed to provide practical tips to event organizers on how to structure their demo day, pitch event or angel group meeting event in light of new federal rules and the current regulatory landscape.

Starting today, September 23, 2013, the final rules published by the SEC in July go into effect and companies can use general solicitation (or advertising) in connection their securities offerings under the new Rule 506(c) of Regulation D of the Securities Act of 1933, adopted under Title II of the JOBS Act. However, the companies that choose to take advantage of general solicitation under the new rules will have to take steps they did not need to take in the past, including additional verification of accredited investor status. If the proposed rules go into effect, there are a further steps that would be imposed on companies choosing to generally solicit, including making advance filings of a Form D, filing with SEC the materials used in the general solicitation and including specific language (referred to as “legends”) in written solicitation materials.
Continue Reading Demo Days, Pitch Events and the New Reg D

Megan Muir.jpgCONTRIBUTED BY
Megan Muir

Earlier this summer, together with some of my partners within DLA Piper (Christopher Paci, Jason Harmon, Darryl Steinhause and Wesley Nissen), I wrote an article about new SEC regulations concerning private offerings. The final rules issued in July 2013 by the SEC go into effect on September 23, 2013. Below is a summary of the changes with respect to the disqualification of certain “bad actors” in connection with private offerings.  Also, attached is a sample Rule 506 Covered Person Questionnaire seeking information about potentially disqualified individuals and entities. The full article also contains a discussion of new rules allowing general solicitation in certain private fundraising as well as a discussion of certain proposed private offering rule changes that are not yet final. That piece may be found here.

The Dodd-Frank Act, enacted in 2010, required the SEC to adopt rules to prohibit use of the Rule 506 exemptions under Regulation D for securities offerings in which certain “bad actors” are involved, whether or not general solicitation or general advertising are used in the offering. Rule 506 is the exemption from registration requirements used in many private offerings, including most startup financings. To fulfill this Dodd-Frank requirement, the SEC has adopted rules that disqualify an issuer from selling securities in reliance upon the Rule 506 exemption if the issuer, its board members, certain of its officers and its large shareholders, among others covered by the rule, have experienced a “disqualifying event.” This is similar to existing bad actor rules, such as those found in Rule 505 of Regulation D, which relies on the disqualification provisions set forth in Rule 262 of Regulation A.

Disqualifying events include criminal convictions in connection with sales of securities, certain SEC civil and administrative actions and certain other orders from financial service industry regulatory authorities. If the issuer or other covered person is deemed a bad actor under this rule, the Rule 506 exemption will not be available to the issuer.

Continue Reading New SEC Rules Disqualifying “Bad Actors” in Private Fundraising