FAQs

Business Law

A personal guarantee, sometimes known as a “PG”, is a promise from an individual to be personally responsible and liable for a debt that is being incurred.  Usually, the President or CEO of a company will be asked to sign a personal guarantee if their business is contracting and the other party wants an individual, rather than a company alone, to be responsible for the debt or performance of the contract.

The person who signs the personal guarantee is known as the guarantor, and the other party requesting the personal guarantee is known as the guarantee.

It’s important to know that in California, all personal guarantees must be in writing in order for them to be enforceable.  Further, the specific terms of the guarantee must be explicitly stated in the contract.  A simple sentence or vague section of the contract usually will not suffice.

If you’re a business owner in Los Angeles or Orange County and you’ve been asked to sign a PG, or if you already have signed a PG, call the business law attorneys at Stone LLP for a consultation to learn how the law will interpret your situation.
In California, the state law follows the “American Rule” which provides that each party must bear their own attorneys fees. Luckily, there are contractual exceptions to this rule, allowing the prevailing party to recoup attorney fees after adjudication of the case in court.

If the case settles before trial, the contractual provisions concerning attorney fees often do not apply. Consult a Los Angeles or Orange County business attorney at Stone LLP when negotiating contracts or when facing a lawsuit and an attorney fee provision is present.
In California, both pursuing and defending a lawsuit can be costly. If you’re an individual person, a small business, or a large corporation, the ability to adequately fund the pursuit of justice can be unevenly weighted.

Attorney’s fees are just that, the fees billed by the attorney or attorneys for the time they spend litigating the case on their client behalf. These are usually not recoverable, except where provided by the contract.

Costs of Suit are all the other costs, which have been incurred to diligently bring the case to trial. These costs may include: court filing fees, court reporter fees, deposition costs, attorney service and messenger costs, expert witness fees, jury fees, and other costs that were incurred.

A prevailing party in a lawsuit has the right to file a Memorandum of Costs after the trial, and the court will determine which costs should be paid by the losing party to the prevailing party. In California, the right to recover costs of suit does not need to be agreed to in writing between the parties, it occurs as an operation of law.
In California, business owners can often be exposed to a myriad of personal liabilities without being aware of such exposure. Stone LLP approaches protecting its business owners and corporate executives from such exposure through asset protection and ongoing risk management.

An attorney can evaluate the corporate structure of your business, determine which insurance policies are in effect and what is or is not covered by the policy, and which business activities would aid in the prevention of future issues. Consult the attorneys at Stone LLP when determining where you may have business or personal liability exposure.
All lawsuits filed in the Superior Court of California (State Court) or the U.S. District Court (Federal Court) are considered to be civil litigation matters. The designation of the case being “complex litigation” varies from county to county, and even courtroom to courtroom.

Generally, cases considered eligible for complex classification are: class action lawsuits, lawsuits involving many parties, cases involving multiple cross-complaints, and those cases possessing international parties, witnesses, or contracts.

In Los Angeles County, if the case is deemed to be complex after the initial proceedings have occurred, it’s not uncommon for the case to be reassigned to a different department or have the main cases be consolidated with other cases, with the first case filed usually being chosen as the lead case number for court case naming and reference purposes.
Arbitration agreements are common in contracts as a way to offer the parties an out-of-court solution should a dispute arise in the future.  If you agree to settle disputes by arbitration, you may be giving up your right to have any future dispute arising from that contract heard by a judge or jury.

There are many nuances to arbitration clauses, and a business attorney should be always consulted when negotiating such language with another party.

The most common difference is between “Arbitration”and “Binding Arbitration”.

If your agreement is for Arbitration, the parties must diligently participate in arbitration by submitting facts and evidence to an arbitrator (a neutral third-party). If the finding is unsatisfactory to either party, then either party may then turn to the judicial system to resolve the dispute.

If the agreement is for Binding Arbitration, then the parties are bound by the arbitrator’s final decision, and any remedies available at law are no longer available to be pursued.

In California, giving up the right to have matters heard by a judge and jury requires that waiver to be in writing, and the writing must meet certain constructional requirements to be enforceable.
Business partnerships are much like business marriages, in that the actions of one party can affect the other party(s) in the business.

If you’re a partner of the business, your options are likely limited to the remedies outlined in the Partnership Agreement. If a Partnership Agreement is absent or vague about how a partner exits or how a dissolution of the partners will be handled, consult a business attorney before disclosing your intent to exit the partnership to the other partners to preserve your legal options with the most flexibility.

If you’re a shareholder of the business, your rights should be outlined in a Shareholder Agreement, and state if you have a voting right. If a Shareholder Agreement is absent or vague, consult a business attorney at Stone LLP to discuss your options and preserve your rights.
The trade secrets of a business often provide the competitive edge in the marketplace the business needs to survive and be profitable. The State of California and the Federal government have long recognized the significance of trade secrets and offer well litigated case law on the topic.

In California, the law views any clause in an employment agreement that prevents an individual from “engaging in a lawful profession, trade, or business of any kind” to be void. If an individual was a partner of a business, rather than an employee, there are changes to how the law is applied.

Non-Compete clauses should focus on the sharing and application of trade secrets, rather than limiting the employees’ future endeavors or career moves in total. If there is proprietary know-how or methodologies separate from the employees experience in general, this information can be protected.

Non-Solicitation language may be included in employment contracts and vendor services agreements, if deemed necessary. For example, this would prevent an employee, Doe, from leaving and then soliciting other employees to come work with Doe at their new employer or at Doe’s new company.

Construction Law

You may be asking yourself “How can a contractor get paid when they forgot to file a mechanics lien?”

In California, filing a mechanics lien claim while the construction project is ongoing is the best and proper practice when an individual or homeowner fails to make progress payments on time. After completion of the project, there are still many remedies that construction companies in Los Angeles and Orange County can pursue when seeking their rightful payment.

Depending on the size of the project, suing a homeowner who failed to pay your construction company may be a financially reasonable decision. Have your case evaluated by a construction law attorney at Stone LLP to learn more.
The Contractors State License Board (CSLB) is a California agency responsible for regulating the construction industry. Any member of the public may file a complaint naming any or all individuals and contractors they believe to be involved. Then, a representative from CSLB investigates those complaints to see if any Administrative action is necessary.

The CSLB complaint is connected to but also completely separate from any lawsuit pending in the Superior Court. The lawyers at Stone LLP can help to protect your construction company and license during a CLSB investigation and during a lawsuit.
The Contractors State License Board (CSLB) has up to four years from the date of violation, and up to ten years for some hidden structural defects.
Yes. Contractors State License Board (CSLB) is a state agency and may discloses the date, nature of complaint, and other information if their investigation finds that the claims meets certain criteria.
Yes, you can still file a mechanics lien claim. Construction contracts need not be in writing for a construction company or individual contractor to file a mechanics lien claim for the time and materials already invested in the project.

There are specific details needed to completely prepare a mechanics lien claim, and certain procedures that must be followed with evidence there of when filing a mechanics lien. Consult an attorney at Stone LLP to ensure you have a clear understanding of the requirements and how each of them affects your ability to get paid.
In California, no. Only licensed construction companies or licensed individual contractor may file mechanics lien claims. There is no option for an unlicensed contractor to recover payment for work or materials.

The Contractors State License Board (CSLB) is responsible for licensing California construction companies.
Yes. In California, it is required that contractors must use statutory lien waiver forms. There is more than one type of lien waiver, and for a lien waiver to be valid and enforceable it must be the correct type and include correct and complete language required by statute.

TIP: Be certain to name each party on the Waiver correctly. Mistaking a DBA for an LLC or an INC. can cause issues that are easy to avoid if problems later arise.
The difference in naming is small and easy to mistake, but can have a drastic impact when you’re trying to get paid for a construction project.

A conditional lien waiver is only effective upon the occurrence of another event, almost always the actual receipt of payment. To put it plainly, the condition that is holding the waiver I usually payment. Once signed, the signor’s lien rights are waived when (or only if) the contractor is actually paid.

An unconditional lien waiver is effective immediately upon signature. It doesn’t matter if payment has yet to be received or if anything else happens before you have the funds in your bank. If you sign an unconditional lien waiver, you are giving up your lien rights regardless if you were paid or not. In an example, if you’re a contractor and signed an unconditional lien waiver and the check bounces, you will likely not get paid and also forfeit your lien rights due to the waiver.

At Stone LLP, we advise our clients to deposit payment and check with their bank to ensure there are no conditions or restrictions on those funds prior to signing an unconditional lien waiver.
In most cases, if someone of competent mind and of age authorizes a change order for new work to be completed on the project, that will suffice as being a valid change order.

Some instances present certain facts that may alter liability. If you’re a Los Angeles or Orange County construction company or individual contractor, schedule a consultation with our construction attorneys at Stone LLP so you can learn how California law applies to your specific situation.
A mechanics lien affects the title to the property in which construction services were rendered. If the property owner sells the property before paying they are still contractually liable to the construction company for payment, assuming a written construction agreement is signed, because they are the party that contracted the services.

However, your right to seek claim under a mechanics lien is likely more complex given the change in property ownership. Dependent on the timeline of events, full mechanics lien rights may be available to the contractor.

The attorneys at Stone LLP practice in both construction law and real estate law, so we’re familiar with sorting out issues regarding property title, title insurance, and how to ensure a construction company is protected from someone not paying.

Real Estate Law

In California, joint tenancy is anwhen more than one natural person or entity (such as a company or partnership) owns a piece of property together. Many married couples own their property as joint tenants, and own equal shares in the real property. Joint tenancy can include a right of survivorship, allowing ownership of the property to transfer to the other tenant(s) when one of the joint tenants dies.
Real Estate property owners are subject to City and local codes and ordinances, State laws, and Federal regulations. These governing bodies impose restrictions on details ranging from fence height limits, to land use and zoning rules.

There are also private arrangements, which may restrict how the real property is used or accessed. These details may be contained an easement or restrictive covenants.
When leasing space for your business, you are likely comparing a few commercial properties for your business to occupy. The landlord or management company is denoted as the Lessor, and your business is the Lessee.

Commercial leases are always negotiated, and a standard contract (or contract of adhesion) should not be accepted. The business ownership, as individuals, may be held personally liable if certain events occur.

Before signing a commercial lease for your business, contact our office to schedule a time to speak with a Los Angeles and Orange County real estate law attorney at Stone LLP. There are many pitfalls with commercial leases that can have detrimental consequences to the business if the signer doesn’t know what to look for in the Lease Agreement.
When a real property transaction is in process, all parties will typically use an escrow company as a neutral third-party to ensure each side as has fully complied with and performed their duties as required to complete the sale and close the transaction.

Before a buyer deposits any money with the escrow company, Escrow Instructions should be signed to establish an agreement between the buyer, seller, and the escrow company.

If a buyer wants to cancel the deal and get have their funds returned, the remedies of how to accomplish this will be outlined in the Escrow Instructions. Similarly, if a seller wants to cancel the deal and not proceed with the sale, the Escrow Instructions will detail how this situation is handled.

Here at Stone LLP, we advise having a real estate attorney review all documents, including the Escrow Instructions to ensure your rights are not being waived in any way. A real estate agent, escrow officer, notary public, or loan signing officer will not have the depth of knowledge to answer your questions fully and may even provide inaccurate information due to their lack of experience in the case law.
In California, all dealings and agreements relating to real property must be in writing.

Commercial leases, purchase agreements, property sale agreements, commission agreements, easements, listing agreements, construction agreements, rental agreements, and all other real estate-related contracts must be in writing to be valid.

If you believe you have an agreement, but there is no clear writing, speak with a real estate attorney at Stone LLP regarding your specific situation.
Real estate investors often form real estate partnerships in California due to the high volume of new construction and property flipping opportunities across the state.

In California, Real Estate Salespersons (agents) and Real Estate Brokers (brokers) are professionals licensed by the California Department of Real Estate (DRE). Those individuals and companies not licensed by the DRE are not allowed to provide services that aid in the sales of real property.

Brokers and Agents have a Duty of Loyalty to their clients, meaning the law imposes a duty requiring the person to act solely in the best interest of their client. If is duty is breached, speak with a real estate attorney to discuss your available remedies which may include revision of the contract and/or forfeiture of commissions.

Additionally, Brokers and Agents have a statutory duty to disclose any fact to a prospective buyer that could affect the value, marketability, or desirability of a property. This duty is separate and different from the Duty of Loyalty. The Duty of Disclosure is to the general public; meaning disclosures about a property must be made even if the Broker or Agent represents the seller.
Possibly, but not necessarily.

An individuals ownership share in any limited partnership, general partnership, or corporation is reflected by those documents which govern the relationship; usually a partnership agreement, general partnership agreement, operating agreement, or another agreement of the like.

Conversely, an individual’sownership share and interest in the actual real property is determined by the title of the property maintained by the County in which the property is situated in, in conjunction with the partnership documents outlined above.

Each situation is unique, and requires a legal evaluation of the pertinent writings and records to determine ownership.
Usually not.

Real Estate Investment partnerships can be formed in a variety of ways. Depending on the structure and language in the partnership agreement, the rights of partners may differ greatly.

Concerns about day-to-day management of the partnership and projects, or a partners voting rights should be discussed with a real estate attorney at Stone LLP. An attorney can review the documents and explain how the partner “puzzle pieces” fit together.
Income earned from real estate is taxable under Federal and State laws. To determine any off sets and your personal liability, consult with a Certified Public Accountant.

The attorneys at Stone LLP can work with your CPA, if you so choose. If you need a referral to a qualified and competent CPA who’s familiar with real estate income properties, real estate investments, and partnership taxes, we’d be happy to offer a referral to you.

Labor & Employment Law

In California, the Labor Code contains a presumption that employees are employed at will. This means that either the employer or the employee may terminate employment at any time, with or without cause or prior notice.

For employers, this is especially important because “cause” is defined under California law as “a fair and honest cause or reason, regulated by good faith on the part of the employer.” Employers would be at a deep disadvantage if required to prove in court that they acted “fairly” and “in good faith” in each dealing with an employee and during every employee termination.
“I acknowledge that my employment is at-will and for no specific duration. It is understood that either myself or the company may terminate my employment at any time, with or without cause or prior notice. My employment-at-will status cannot be changed except with a writing signed by an authorized officer of the company.”

In California, there is no law stating that a reason for termination is required.  This being since most employer-employee relationships are at-will.

As a California employer, you need to be informed that the difference between exempt and non-exempt employee classification is not only in terms of salary vs. hourly compensation structure.

  • Exempt – Are those employees whom are NOT subject to overtime requirements, minimum wage, or break/rest periods; or
  • Non-Exempt – Are those employeesbeing subject to overtime pay requirements, minimum wage, and breaks/rest periods.


According to the Fair Labor Standards Act (FLSA), there are specific rules which determine if an employee can be considered “exempt” from overtime. The way you pay the employee (salary vs. hourly) is not the complete rule, rather the employee has to pass a three prong “tests” to be legally classified as exempt.

  1. Salary Level: The position must earn a minimum salary each week, which changes from time to time, and is determined by the Department of Labor (DOL). In California, exempt employees must be paid at least twice the hourly state minimum wage. The minimum rate varies depending on if you are a small or large employer, and the rate changes yearly.
  2. Salary Basis: Your employee must be paid a predetermined amount each pay period (otherwise known as a fixed salary), without reduction for the quantity or quality of work performed. Note that this test does not apply to some healthcare employees (such as doctors).
  3. Job Duties: The employee must meet the duty requirements for one of three categories of exemption: Administrative, Executive, or Professional. This is where you would be best advised to consult an attorney at Stone LLP who practices employment law, and represents California businesses only, never the employee.


Employee classifications are at the center of many IRS and Department of Labor audits, which demands you, the employer, must be aware and competent when structuring offer letters and in how records are maintained for employees.
For most California employers, the employees you have are at-will employees, meaning you can fire and employee for any reason or no reason at all. Keep in mind, employers cannot fire employees for those reasons which could be considered to violate federal or state discrimination laws.
California employers are sued every day from employees alleging various claims. As an employer, you may ask employees to sign an arbitration agreement, meaning the employee give up their right to sue the employer in court over job-related claims such as discrimination, wrongful termination, or wage and hour claims. An employee that signs an arbitration agreement must pursue their claims against the employer through arbitration.

An arbitration agreement is not a total solution for California employers looking to safeguard against employment lawsuits. If the employee chooses, they can still lodge a complaint with a government agency for certain claims, and then that agency can choose to sue the employer in court on behalf of the employee. This is possible because the arbitration agreement is signed with the employee, and doesn’t extend to any agency chooses to enforce the laws.
California employers must be aware of legal timelines, known as statute of limitations, which serve as deadlines for the employee if they want to pursue legal action against the company.

The duration a employee has to sue an employer varies by the type of claim the employee is planning to file. The statute of limitation on employment law and labor claims can range from 6 months to 3 years.

Employers should know, if claims are made against you or your company after the statue of limitations has passed then this must be raised as a defense. In some circumstances, the statute can be paused or shifted if certain other events have occurred. In nuanced areas of employment law, it’s best to consult an attorney who can advise on your specific situation. The attorneys at Stone LLP capture all facts and then advise which resolution options are best for the employer.
No. As a California employer, there is no law requiring an employee to provide you with a verbal or written notice of their intent to quit.
The new California law went into effect in 2016, known as AB 1513. This adds a section to the California Labor Code, which applies “for employees who are compensated on a piece-rate basis for any work performed during a pay period.”

It establishes compensation and wage statement requirements for rest and recovery periods and “other nonproductive time” for piece-rate employees going forward from the effective date of the statute.

Although most common in Manufacturing with garment sewers, piece-rate can also be found at Automotive Dealerships when paying a mechanic a “book rate”, as well as with nurses, carpet layers, telecom and IT technicians, and carpenters.

If your business pays employees or contractors on a piece-rate and you have HR issues or employment claims alleging wrongdoing by you or your company, the attorneys at Stone LLP can offer advice.
In California, the Fair Labor Standards Act (FLSA) sets the guidelines for hours, wages, and overtime. It mandates that workers are compensated for the time spent working, but also allows employers to use rounding when calculating the total time worked. In an effort to be fair to the employer and employee, the “7-Minute Rule” is commonly used.

In this example, the Company tracks time in 15-minute increments. The cutoff point for rounding down is 7 full minutes. If the employee works at least 8 full minutes, the employer must round up to 15 minutes of time. If an employee works 7 full minutes and any number of seconds, but less than 8 minutes, the company can round the number down to the nearest 15 minutes.
The State of California, Department of Industrial Relations, shares with us that “an employer can lawfully withhold amounts from an employee’s wages only:

(1) when required or empowered to do so by state or federal law, or (2) when a deduction is expressly authorized in writing by the employee to cover insurance premiums, benefit plan contributions or other deductions not amounting to a rebate on the employee’s wages, or (3) when a deduction to cover health, welfare, or pension contributions is expressly authorized by a wage or collective bargaining agreement.

Although a wage garnishment is a lawful deduction from wages under Labor Code section 224, an employer cannot discharge an employee because a garnishment of wages has been threatened or if the employee’s wages have been subjected to a garnishment for the payment of one judgment.
In California, a “split shift” is when a particular employees schedule for is interrupted by non-paid and non-working time at request or direction by the employer.In California, a “split shift” is when a particular employees schedule for is interrupted by non-paid and non-working time at request or direction by the employer.

An example of a split shift could be a nanny whose schedule is to work from 8:00 a.m. to 11:30 p.m. and return at 2:00 p.m. to work again.The split shift premium is typically one hour at the state minimum wage, or the local minimum wage if there is one, whichever is greater.

We at Stone LLP advise that employers who schedule their employees on split shiftsitemize the premium payment on the pay stub provided to the employee. It should be listed separately as the “Split Shift Premium” so it’s clear in payroll records that the premium is in fact being paid.

Airport & Aviation Law

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