New Year, New Laws for Business Lawyers

Were you able to keep track of the new legislative changes that affect California businesses and business lawyers? Don’t worry, we did and here are some of the key statutory changes you need to know about.

  • California is the first state to require publicly traded companies to include women on their boards of directors. A fourth of publicly held corporations with headquarters in California don’t have any women on their boards of directors. A new law will change that: By the end of 2019, companies will have to have at least one woman on their boards and will need up to three women by the end of 2021, depending on the number of board seats. The penalties for not opening the corporate board room are stiff—companies can be fined $100,000 for a first violation and $300,000 for subsequent violations. See Corp C §§301.3, 2115.5 (added by Stats 2018, chap 954, effective January 1, 2019). On boards of directors generally, see CEB’s Counseling California Corporations, chap 2.
  • Definition of sexual harassment expanded. The definition of sexual harassment has been expanded to include harassment by a defendant who has held himself or herself out as being able to help the plaintiff establish a business, service, or professional relationship with the defendant or a third party. The types of professional relationships covered under this definition have been augmented to include investors, elected officials, lobbyists, directors, or producers. And the requirement that the plaintiff be unable to easily terminate the relationship has been deleted. See CC §51.9 (amended by Stats 2018, chap 951, effective January 1, 2019). On sexual harassment in the workplace, check out CEB’s Advising California Employers and Employees, chap 15.
  • The first small business truth-in-lending law in the country. A new law requires any person engaged in the business of “commercial financing” (as defined) to provide specified disclosures to prospective borrowers and to obtain the borrower’s signature on that disclosure before consummating the loan. It applies to loans between $5000 and $500,000. Although the law will take effect on January 1, 2019, implementation awaits adoption of regulations. See Fin C §§22780.1 and 22800–22805 (added by Stats 2018, chap 1011). For more on commercial lending, see CEB’s Financing and Protecting California Businesses.
  • Clarification on creditors and time-barred debt. There’s new clarification on what a debt collector can and must do regarding the 4-year limitations period on a debt collection action:
    • Debt collectors must state that the law limits how long a debtor may be sued on a debt in the first written communication to a debtor after the debt has become due.
    • Debt collectors can’t send a written communication to a debtor to collect on a time-barred debt unless it states that the debtor may not be sued for the debt; however, debt collectors can still threaten to report the debt to a credit reporting agency if it remains unpaid.
    • Once the four years have run, generally no collection action may be brought against the debtor, including arbitration.

See CC §1788.14 and CCP §337 (amended by Stats 2018, chap 247, effective January 1, 2019). On representing a creditor, turn to CEB’s Debt Collection Practice in California, chap 1.

Get more of these key legislative updates in CEB’s free 2018 NewsFlash! Key Statutory Developments for Business Lawyers. To keep up with all developments in business law, subscribe to CEB’s OnLAW® Business Law Library—a virtual encyclopedia for business law, full of commentary, practice advice, and sample documents.

Check out all CEBblog™ posts on business law.

© The Regents of the University of California, 2019. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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