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Unpaid Commissions in California: How to Recover What You’re Owed

Wed, 10 Jun 2026 13:33:16 GMT

Unpaid Commissions in California:

How to Recover What You’re Owed

Claire Melehani

.Commissions are one of the most disputed categories of compensation in California employment law. Employers and employees often disagree about when a commission is earned, whether it is subject to clawbacks, and what happens to unpaid commissions when employment ends. These disputes are common across industries — from technology sales and pharmaceutical sales to real estate, insurance, and retail — and they can involve significant dollar amounts accumulated over months or years.

California law gives commission earners powerful protections. Earned commissions are wages under California Labor Code section 204.1. That classification matters enormously: it means the full apparatus of California wage law applies — payment timing requirements, waiting time penalties for late final paychecks, and the right to recover attorney’s fees if you have to sue to collect what you are owed. This guide explains the legal framework, the most common violations, what you can recover, and how to act.

What California Law Says About Commissions

The Statutory Definition

California Labor Code section 204.1 defines commissions as compensation paid to employees who are engaged in sales of goods or services for a percentage of the price charged to customers. The definition matters because it determines which workers receive the full protections of California’s commission statutes — and which payment structures fall outside it.

Not every incentive payment is a commission under California law. The following are specifically excluded from the commission definition under Labor Code section 2751, subdivision (c):

Short-term productivity bonuses paid to retail clerks
Temporary variable incentive payments that increase, but do not decrease, payment under a written contract
Bonus and profit-sharing plans — unless the employer has offered to pay a fixed percentage of sales or profits as compensation for work performed

A nondiscretionary bonus — one that is promised based on measurable performance metrics or employment milestones — is treated as earned wages once the conditions are satisfied, even if it is not technically a commission. California courts apply the same wage protections to earned nondiscretionary bonuses as to commissions.

The Written Agreement Requirement

California Labor Code section 2751 imposes a mandatory written agreement requirement. Whenever an employer enters into an employment contract that involves the payment of commissions, that contract must be in writing and must set forth how commissions are computed and paid. The employer must provide a signed copy to the employee and obtain a signed receipt.

The statute also addresses what happens when a commission agreement expires and the parties continue working under its terms: the expired contract is presumed to remain in full force and effect until it is superseded or employment is terminated. This prevents employers from arguing that the absence of a current signed agreement eliminates their payment obligations.

If your employer never gave you a written commission agreement — or gave you one that failed to specify how commissions are calculated — that is a violation of California law. Courts will use your testimony, emails, past payment practices, and other evidence to reconstruct the commission terms the employer failed to document.

When Is a Commission ‘Earned’?

The most contested question in commission disputes is when, exactly, a commission becomes earned. The answer depends on the specific language of the written commission agreement — which is precisely why the written agreement requirement matters so much.

Common earning triggers in commission plans include: completing a sale, execution of a contract, customer payment, product delivery, or a combination of these. An employer who defines earning at a late stage in the sales process — say, customer payment — may be able to withhold commissions on deals that fall through after closing. But an employer who retroactively changes the earning trigger after the sale is made, or who imposes conditions not in the original agreement, faces a strong wage claim.

California courts have consistently held that once a commission is earned under the agreement’s own terms, the employer cannot unilaterally impose new conditions on payment, reduce the commission amount, or condition payment on the employee remaining employed at the time the check is cut — if the employee has already done everything required to earn the commission.

Common Ways California Employers Withhold Commissions

Commission disputes arise from a range of employer conduct, some of it deliberate and some of it structural. Understanding the most common patterns helps employees identify when their rights have been violated.

Retroactive plan changes without notice. Employers sometimes modify commission structures mid-cycle, after deals have already been closed under the prior plan, without providing a new written agreement. If the modification reduces commissions already earned, it is unlawful.

Clawback provisions that exceed lawful limits. A commission plan may include provisions that require repayment if a customer cancels or fails to pay within a certain period. California courts scrutinize these provisions carefully — clawbacks that extend indefinitely, apply to fully performed contracts, or retroactively reduce already-earned commissions may be unenforceable.

Acceleration and draw mismatches. Some commission plans include draw arrangements where the employer advances money against future commissions. If a draw is genuinely an advance on earned commissions, the balance-due recovery may be lawful. If it is structured as a loan disguised as a draw, different rules apply, and many such arrangements are void under California law.

Termination cutoffs. Employers frequently argue that a commission is not owed because the employee was terminated before the deal officially closed or before the customer paid. Whether this is lawful depends entirely on the written agreement’s earning trigger — and if the agreement is ambiguous, California courts construe it in the employee’s favor.

Quota restructuring. Changing a quota midway through a performance period to prevent a commission payout — a tactic occasionally used at companies undergoing restructuring — is a modification of the commission agreement that requires written notice and cannot be applied retroactively to deals already in the pipeline.

Failure to include commissions in overtime calculations. California requires overtime to be paid at the regular rate of pay, which must include all nondiscretionary compensation — including commissions. Employers who calculate overtime on base pay alone, without factoring in earned commissions, are underpaying overtime on top of the commission dispute.

What You Can Recover for Unpaid Commissions in California

California wage law provides a layered set of remedies for unpaid commissions. Understanding the full measure of potential recovery — not just the base commissions owed — is essential to evaluating the strength and value of a claim.

Unpaid Commissions

The foundation of every claim: the full amount of commissions earned under the agreement’s own terms that were not paid. This includes commissions withheld at termination, commissions reduced without authorization, and commissions on deals that were attributed to other employees without justification.

Waiting Time Penalties

Under California Labor Code sections 201 and 202, all earned wages — including commissions — must be paid immediately upon termination (if the employer terminates) or within 72 hours of resignation. Labor Code section 203 imposes waiting time penalties of one day’s wages for each calendar day the final paycheck is late, up to a maximum of 30 days. For commission earners who are owed significant unpaid commissions at termination, 30 days of waiting time penalties can add substantially to total recovery.

Liquidated Damages for Minimum Wage Violations

If the commission shortfall results in the employee receiving less than California’s minimum wage for any pay period, liquidated damages equal to the unpaid wages are available under Labor Code section 1194.2 — effectively doubling the base recovery for those pay periods.

PAGA Civil Penalties

When the commission violation is systemic — affecting multiple employees on the same plan — a PAGA representative action can generate additional civil penalties. Following the 2024 PAGA reforms (AB 2288 and SB 92, effective June 19, 2024), the penalty framework is more nuanced than before: default penalties remain at $100 per employee per pay period for initial violations and $200 for subsequent violations, but penalties may be reduced to $50 for isolated, nonrecurring violations lasting fewer than 30 consecutive days, and may be capped at 15% or 30% of the total penalties sought if the employer demonstrates proactive or responsive compliance efforts. Employees now receive 35% of PAGA penalties (increased from 25%). Importantly, PAGA plaintiffs must now have personally experienced each Labor Code violation they seek to recover on a representative basis. PAGA penalties are separate from and cumulative with individual wage recovery.

Attorney’s Fees

California provides fee-shifting in unpaid wage actions, which makes strong commission claims economically viable regardless of the amount at stake. For claims involving unpaid overtime (including overtime underpayment caused by failure to include commissions in the regular rate), Labor Code section 1194 provides one-way fee-shifting: a prevailing employee recovers fees, but a prevailing employer does not. For other wage claims, Labor Code section 218.5 provides for reasonable attorney’s fees to the prevailing party, though an employer can recover fees only upon a showing that the employee brought the claim in bad faith. Commission claims brought as breach of written contract may also carry attorney’s fees if the agreement includes a prevailing-party fee provision. Employers know the fee exposure is real — and it is one of the most effective settlement levers in commission disputes.

Interest and Statutory Penalties

Prejudgment interest accrues on unpaid commissions from the date they were due. Labor Code section 210 also imposes statutory penalties for late wage payments: $100 for an initial violation and $200 plus 25% of the amount unlawfully withheld for willful or subsequent violations.

Statutes of Limitations: How Long You Have to File an Unpaid Commission Claim

The deadline to pursue a commission claim depends on which legal theory you bring. Multiple limitations periods may run simultaneously:

Statutory wage claim (Code Civ. Proc., § 338, subd. (a)): 3 years from each missed payment date
Written contract claim (Code Civ. Proc., § 337): 4 years — applicable when the commission agreement is a written contract
Unfair business practices (Bus. & Prof. Code, § 17200): 4 years — can extend recovery beyond the standard wage claim period
PAGA claim (Lab. Code, § 2699): 1 year from each violation personally experienced by the plaintiff (post-June 2024 reform under AB 2288)

Because multiple clocks run simultaneously, and because the written contract period (four years) is longer than the statutory wage period (three years) for commission claims, how you frame your claim affects how far back recovery can reach. An attorney can evaluate which theory maximizes your recoverable period given your specific facts.

How to Pursue an Unpaid Commission Claim in California

Step 1: Gather and Preserve Your Documentation

Before taking any formal action, secure copies of every document relevant to your commission claim — your written commission agreement, all amendments or plan updates, emails from management about deals or commissions, deal sheets, CRM records, customer contracts, and pay stubs showing what was actually paid versus what was owed. If you have access to these through work systems, save them now. Once employment ends, access to company systems disappears.

Step 2: Send a Written Demand

A formal written demand letter — drafted by counsel and sent to the employer’s HR department and legal team — identifies the specific commissions claimed, quantifies the amount with detail, identifies the legal basis for the claim, and demands payment within a specified time. A demand letter creates a documented record of the claim and the employer’s response, and it frequently resolves disputes that would otherwise require litigation.

Step 3: File with the California Labor Commissioner

The Labor Commissioner’s Office (Division of Labor Standards Enforcement) accepts wage claims without filing fees. The process involves a settlement conference and, if that fails, a hearing before a hearing officer. It is accessible without an attorney for straightforward claims. However, the current backlog means administrative claims take significantly longer than statutory targets suggest — and the collection rate on administrative awards is low. For larger claims or contested disputes, a civil lawsuit is often the more effective route.

Step 4: File a Civil Lawsuit in Superior Court

A civil lawsuit in California Superior Court allows full discovery of the employer’s records, the ability to add PAGA and unfair competition claims, and access to the full measure of remedies including attorney’s fees. Most unpaid commission cases that proceed to litigation settle before trial once the employer faces the combination of quantified damages, PAGA exposure, and fee-shifting provisions that make defending a weak case costly.

Frequently Asked Questions About Unpaid Commissions in California

My employer says my commission was not earned because the customer canceled. Do I still have a claim?

It depends entirely on what your written commission agreement says about the earning trigger. If the agreement defines a commission as earned upon signing the contract or closing the deal — before customer payment — a post-sale cancellation does not eliminate your right to payment. If the agreement defines earning as contingent on customer payment, the analysis is more complex. Review your specific agreement language with an employment attorney before assuming the cancellation defense is valid.

I was never given a written commission agreement. Does that mean I cannot recover?

No. The absence of a written agreement is a violation of Labor Code section 2751 — but it does not eliminate your right to the commissions you earned. Courts reconstruct the commission terms from emails, pay stubs, past payment history, and testimony when no written agreement exists. In cases of ambiguity, California courts interpret wage agreements in the employee’s favor.

Can my employer deduct money I owe from my final paycheck?

California law significantly limits wage deductions. Employers generally cannot deduct for business losses, alleged overpayments under disputed commission plans, or draw recovery from final commission checks without a clear, lawful written agreement authorizing the deduction. Unauthorized deductions from a final paycheck are an independent violation of Labor Code section 221 and may support additional penalty claims.

What if I signed a severance agreement — did I waive my commission claim?

It depends on the specific language of the release. Many severance agreements include broad releases of ‘all claims,’ which may encompass commission claims. However, a release must be knowing and voluntary, and claims the employee did not know they had may not be covered. Before signing any severance agreement, have an employment attorney review it to determine whether it extinguishes commission claims — and whether the severance amount reflects the value of those claims.

Can remote workers in California bring commission claims?

Yes. California wage law applies to employees performing work in California, including remote workers whose work is performed here regardless of where the employer is headquartered. A remote employee based in California who earns commissions under a California employment relationship has the full protection of California commission law, even if the employer’s written plan says another state’s law governs.

The Bottom Line: Earned Commissions Are Wages — Protect Them

California law draws a clear line: once you have satisfied every condition required to earn a commission under your agreement, that money belongs to you. It is a wage. Your employer cannot withhold it, reduce it retroactively, or condition it on your continued employment after the fact. And if they do, California gives you the tools to recover not just the commissions themselves, but penalties, interest, and the attorney’s fees it cost you to get them.

The key is acting before evidence disappears and before the limitations clock narrows your options. Written agreements, email trails, CRM records, and pay stubs are the foundation of a strong commission claim — and they are most accessible in the period immediately following a dispute, before employment ends or systems are deactivated.

At McLellan Law Group, LLP, our employment attorneys represent California workers in unpaid commission disputes from initial demand through trial. If your employer has withheld commissions you earned, we will evaluate your facts, identify every applicable remedy, and give you a direct assessment of what your claim is worth.

Advertising Material Disclaimer: This article is an advertisement for legal services by McLellan Law Group, LLP. The information provided is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Responsible Attorney: Claire Melehani, Esq., 20665 4th Street, Suite 202, Saratoga, CA 95070.

Golden Parachutes in California: What Executives and Employers Need to Know

Wed, 10 Jun 2026 13:22:25 GMT

Golden Parachutes in California: What Executives and Employers Need to Know

Claire Melehani

The term ‘golden parachute’ refers to significant compensation packages — typically including severance pay, accelerated equity vesting, cash bonuses, continued benefits, and other compensation — provided to senior executives when they are terminated or step down in connection with a corporate acquisition, merger, or other change-of-control event. The term is colloquial, not a legal term of art, but the legal mechanisms that govern these arrangements are precise, consequential, and frequently misunderstood by both executives negotiating them and companies structuring them.

In California — the headquarters of a disproportionate share of the technology companies that are acquired, merged, or restructured every year — golden parachute provisions appear in executive employment agreements, change-of-control agreements, and equity plan documents across every level of the market. When a deal closes and the parachute triggers, the amounts involved can be substantial. The tax consequences of getting the structure wrong can be equally substantial. And when disputes arise over whether the parachute was triggered, what it covers, or whether it was properly honored, California employment and contract law governs the resolution.

This article explains what golden parachutes are, what federal tax law taxes and penalizes, how California law interacts with these arrangements, and what both executives and employers need to know before, during, and after a change-of-control event.

What Is a Golden Parachute? Components and Triggers

What Qualifies as a Golden Parachute Payment

Under IRC Section 280G, the primary federal statute governing these arrangements, a ‘parachute payment’ is broadly defined as any payment in the nature of compensation made to a ‘disqualified individual’ that is contingent on a change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of its assets.

The definition encompasses a wide range of compensation structures:

• Cash severance payments

• Accelerated vesting of stock options, restricted stock units (RSUs), and other equity awards

• Cash bonuses paid at or after the change-of-control event

• Continuation of health insurance and other benefits

• Salary continuation during a post-termination period

• Non-competition payments

• Enhanced retirement contributions and deferred compensation

• Transfer of company property

• Gross-up payments designed to reimburse the executive for excise taxes

The breadth of the definition means that structuring these arrangements requires careful analysis of every form of compensation the executive might receive in connection with the transaction — not just the obvious cash severance component.

Who Is a ‘Disqualified Individual’?

Section 280G’s penalty regime applies to payments made to ‘disqualified individuals,’ which include officers of the corporation, shareholders owning more than 1% of the company’s stock, and highly compensated individuals.

For Section 280G purposes, a ‘highly compensated individual’ is defined as an employee who is a member of the group consisting of the highest-paid 1% of the employees of the corporation or, if less, the highest-paid 250 employees of the corporation. (This definition is distinct from the ‘highly compensated employee’ threshold used for retirement plan nondiscrimination testing under IRC Section 414(q), which uses a different dollar-amount test.) The definition can extend to former employees who left within 12 months before the change-of-control event, making it relevant beyond current executives at the time of the transaction.

What Triggers a Change of Control

A change of control for Section 280G purposes can be triggered by any of the following events:

A change in the ownership of a corporation — generally when one person or group acquires more than 50% of the total fair market value or total voting power of the corporation’s stock
A change in the effective control of a corporation — when a person or group acquires ownership of stock possessing more than 20% of total voting power within a 12-month period, or when a majority of the board of directors is replaced during a 12-month period by directors not endorsed by the prior board
A change in the ownership of a substantial portion of corporate assets — when a person or group acquires assets with a total gross fair market value equal to or more than 40% of the corporation’s total gross assets

The Federal Tax Framework: IRC Sections 280G and 4999

The most significant legal issue in golden parachute planning is the interaction of two federal tax code provisions — Sections 280G and 4999 — that together create a powerful disincentive to parachute payments that exceed statutory thresholds.

The Safe Harbor Amount

The centerpiece of the Section 280G analysis is the ‘safe harbor’ amount: three times the executive’s ‘base amount,’ which is their average annual taxable compensation from the corporation over the five calendar years preceding the year of the change of control. If the total parachute payments are less than three times the base amount, no penalty applies. The corporation retains its deduction, and the executive owes no excise tax.

The penalty is binary and severe: if total parachute payments equal or exceed three times the base amount — even by one dollar — the entire excess over one times the base amount (called the ‘excess parachute payment’) becomes subject to a 20% excise tax imposed on the executive under Section 4999, and the corporation simultaneously loses its deduction for the entire excess amount under Section 280G. A payment that clears the safe harbor by a small margin can trigger a tax consequence entirely disproportionate to the excess.

The Double-Penalty Structure

The compounding effect of the two provisions is significant and is often underappreciated in transaction negotiations. The executive pays a 20% excise tax on the excess parachute payment on top of ordinary income tax — meaning a combined federal marginal rate of approximately 57% on the excess amount for a California-based executive in the top bracket. Simultaneously, the company loses its deduction for the excess, creating a second layer of economic cost. The combined after-tax cost to both parties frequently exceeds the value of the excess payment itself.

Gross-Up Provisions

Because the 20% excise tax can significantly reduce the net value of a golden parachute to the executive, many executive employment agreements include a ‘gross-up’ provision: a commitment by the company to pay the executive an additional amount sufficient to cover the excise tax and the taxes on the gross-up payment itself, leaving the executive in the same after-tax position as if no excise tax had been imposed. Gross-up provisions are common in large-company executive agreements but have faced increasing shareholder and governance pressure. Since the 2010s, institutional investors and proxy advisors have pushed back on uncapped gross-up provisions, and many companies have replaced them with ‘best-of-net’ or ‘modified cutback’ provisions that reduce payments to just below the safe harbor when the reduction produces a better after-tax outcome for the executive.

Entities Exempt from Section 280G

Not all entities are subject to Section 280G. Corporations that are not publicly traded can structure parachute payments to fall outside Section 280G entirely if shareholder approval is obtained in accordance with Treasury Regulation 1.280G-1. To qualify for this private-company exemption, the corporation must not be publicly traded, and the payment must be approved by more than 75% of the company’s shareholders — excluding the disqualified individuals who are receiving the parachute payments — after adequate disclosure of all material facts. For California-based startups and closely held companies acquired in M&A transactions, this shareholder approval process is a standard and important planning tool.

California Law Considerations

While the federal Section 280G framework is the primary analytical lens for golden parachute planning, California law adds several independent considerations that affect both the enforceability of these arrangements and the rights of executives when disputes arise.

California’s At-Will Employment Doctrine and Change-of-Control Agreements

California is an at-will employment state under Labor Code section 2922 — meaning either party can terminate employment without cause. Golden parachute arrangements are typically structured as exceptions to the at-will default: they promise significant compensation if employment is terminated without cause, for good reason, or in connection with a change-of-control event. The enforceability of these promises as written contracts in California depends on their specific terms, the adequacy of consideration, and whether they satisfy California’s contract formation requirements.

California courts enforce carefully drafted change-of-control severance agreements as binding contracts. An employer that fails to honor a golden parachute following a qualifying change-of-control event faces a breach of contract claim, and depending on how the severance was withheld, potentially a wage claim as well — since severance that was earned and vested before termination can constitute wages under California law.

FEHA and Discrimination in Severance Structuring

California’s Fair Employment and Housing Act prohibits discrimination in the terms and conditions of employment, including severance. A company that structures its post-acquisition severance program in a way that provides substantially different terms to executives based on age, sex, national origin, or other protected characteristics may face independent FEHA exposure in addition to any contract dispute. This is particularly relevant in technology company acquisitions, where workforce restructurings can disproportionately affect older or more senior employees, and where severance negotiations sometimes produce disparate outcomes across protected classes.

The Intersection with California Wage Law

Whether a golden parachute payment constitutes a ‘wage’ under California Labor Code section 200 affects how and when it must be paid and what penalties attach to delayed payment. Cash severance payments contingent on a future event — such as a change-of-control closing — are generally not wages until the triggering event occurs. Once triggered, however, the timing of payment may implicate California’s wage payment statutes, and an employer’s failure to pay promptly can trigger waiting time penalties under Labor Code section 203 for the portion that qualifies as earned compensation.

Non-Compete Provisions

Golden parachute packages frequently include non-compete or non-solicitation provisions as part of the consideration for the enhanced severance. California Business and Professions Code section 16600 renders most non-compete agreements void as contrary to public policy — with only very narrow exceptions for the sale of a business.

California’s prohibition was significantly strengthened effective January 1, 2024, by two statutes. SB 699 added Business and Professions Code section 16600.5, which declares that any contract void under section 16600 is unenforceable ‘regardless of where and when the contract was signed’ — extending the prohibition to out-of-state agreements enforced against California residents and creating a private right of action for injunctive relief, damages, and attorney’s fees. AB 1076 codified the prohibition by declaring it ‘unlawful to include a noncompete clause in an employment contract, or to require an employee to enter a noncompete agreement,’ and imposed a notice requirement obligating employers to notify current and recent former employees that their noncompete clauses are void.

An executive who signs a golden parachute agreement with an embedded non-compete and then is pursued for violating it has significant California law protection. Conversely, acquirers relying on executive non-competes as part of their transaction rationale should understand that California’s non-compete prohibition extends to out-of-state agreements enforced against California residents, as reinforced by the California Supreme Court’s decision in Application Group, Inc. v. Hunter Group, Inc. (1998) 61 Cal.App.4th 881 and now codified by SB 699 and AB 1076.

California Income Taxation of Parachute Payments

California does not have a state equivalent of IRC Section 280G or Section 4999 — meaning California does not impose an additional state-level excise tax on excess parachute payments. However, all components of a golden parachute are subject to California income tax at the ordinary income rate for California residents, including accelerated equity vesting, cash bonuses, and continued benefits. For high-income California executives, the combined federal and state marginal rate on parachute income can exceed 50%, making pre-transaction tax planning — including careful allocation of payments between pre- and post-transaction periods — material to net value.

What Can Go Wrong: Common Golden Parachute Disputes

Golden parachute disputes in California arise from several recurring patterns. Understanding them helps both executives negotiating these agreements and companies structuring them anticipate where conflict is most likely.

Triggering event disputes. Was there actually a change of control as defined in the agreement? Acquisitions structured as asset sales rather than stock purchases, partial acquisitions, and reorganizations within a corporate family can all generate genuine disputes about whether the defined triggering event occurred.

‘Good reason’ definitions. Many golden parachute agreements pay only on a ‘double trigger’ — termination without cause or resignation for ‘good reason’ within a specified period after a change of control. The ‘good reason’ definition is heavily negotiated and frequently litigated. Executives who believe the acquiring company’s conduct constituted good reason — by reducing compensation, materially changing duties, or requiring relocation — face the burden of invoking the agreement’s notice and cure procedures correctly before resigning.

Payment timing disputes. Agreements that promise post-closing payments are subject to both contractual enforcement and, where the payment qualifies as wages, California wage law. Delays in payment can convert a contract dispute into an employment law claim with penalty exposure.

Equity acceleration disagreements. Accelerated vesting of equity awards requires coordination between the employment agreement, the equity plan, and the award agreements. Inconsistencies between these documents — common in quickly negotiated transactions — can create disputes about what vested, when, and at what price.

Clawback and forfeiture enforcement. Post-Sarbanes-Oxley clawback provisions and Dodd-Frank clawback requirements allow public companies to recover executive compensation in certain circumstances. How these interact with negotiated golden parachute terms is a growing area of dispute.

For Executives: Negotiating and Protecting Your Golden Parachute

Whether you are negotiating an initial executive employment agreement, renegotiating ahead of an anticipated transaction, or evaluating what you are owed following a change-of-control event, the following practice points apply.

Negotiate the triggering event definition precisely. Vague definitions of ‘change of control’ create room for employers to argue that a transaction did not qualify. Work with counsel to define the triggering events specifically and comprehensively, including asset sales and partial acquisitions.

Address the double-trigger carefully. If your agreement requires termination without cause or for good reason, negotiate a clear definition of ‘good reason’ that covers the most realistic post-acquisition scenarios — changes in title, reporting structure, compensation, and location.

Understand your Section 280G position before signing. Ask for a preliminary 280G analysis so you know whether your total compensation package — including equity acceleration — is likely to trigger excess parachute payment treatment and how that affects your net value.

Negotiate the gross-up or cutback mechanism explicitly. Understand whether your agreement provides a gross-up (full tax reimbursement), a ‘modified cutback’ (reduced to the safe harbor if the reduction produces a better after-tax result), or no protection at all.

Preserve your rights at termination. If you believe a change of control has triggered your golden parachute and the company is not honoring it, do not resign without first consulting counsel. Resignation may affect your ability to claim ‘good reason’ termination benefits, and the notice and cure procedures in your agreement may have specific timing requirements.

For Employers: Compliance and Risk Management

California companies — and acquirers of California companies — that have executive compensation arrangements containing golden parachute provisions should address the following proactively.

Update 280G analyses before transaction close. Any change-of-control event requires a current Section 280G analysis reflecting the transaction structure, total compensation, and allocation of payments across pre- and post-closing periods. Waiting until after the transaction closes limits the options available to manage the tax exposure.

Use the private-company shareholder approval process when available. For closely held companies, the Section 280G shareholder vote — requiring more than 75% approval after full disclosure — can eliminate the excise tax and preserve deductibility. This process requires advance planning and disclosure documentation that must be prepared before the transaction closes.

Review equity plan documents for consistency with employment agreements. The most common source of executive compensation disputes in M&A transactions is inconsistency between the employment agreement’s promise of accelerated vesting and the equity plan or award agreement’s treatment of change-of-control events. Resolve these inconsistencies before the transaction rather than after.

Comply with California wage law timing requirements for any payments that qualify as wages. If any component of the golden parachute constitutes earned compensation under California Labor Code section 200, the timing of payment is subject to California wage law requirements — not just the contractual payment schedule.

Ensure non-compete provisions are California-compliant or removed. Including non-compete provisions in golden parachute agreements with California-based executives is a significant legal risk. These provisions are void under California Business and Professions Code section 16600 and sections 16600.5 (SB 699), and including them may constitute an unlawful employment practice under AB 1076. Attempting to enforce them can create independent liability, including exposure to injunctive relief, damages, and attorney’s fees.

Frequently Asked Questions About Golden Parachutes in California

My company was acquired and I was let go. Is my golden parachute automatically triggered?

Not automatically — it depends on your specific agreement’s triggering conditions. Most golden parachute agreements require both a change of control and a qualifying termination event within a specified period (the ‘double trigger’). If your agreement requires termination without cause or resignation for good reason following a change of control, you need to evaluate whether your termination was ‘without cause’ as defined in the agreement and whether the timing falls within the specified post-closing window. Review your employment agreement and consult an employment attorney before assuming the payment is or is not owed.

How is the Section 280G safe harbor calculated for someone who received equity compensation?

The safe harbor threshold is three times your ‘base amount’ — your average annual W-2 taxable compensation from the company over the five calendar years preceding the year of the change-of-control event. To avoid triggering the excise tax, total parachute payments must remain below that threshold. Equity compensation that was included in your W-2 income in prior years (including income from prior option exercises and RSU vesting) counts toward the base amount calculation. Equity that accelerates at closing is added to the parachute payment total and compared against the safe harbor threshold. For executives with large unvested equity positions accelerating at a high-value acquisition price, the 280G analysis can be complex and requires professional modeling.

Can a California court order my company to pay a golden parachute it is refusing to honor?

Yes, if the golden parachute is a binding contractual obligation and all triggering conditions have been met. A breach of a change-of-control severance agreement is a breach of contract actionable in California Superior Court. Depending on the nature of the withheld payment, it may also support wage claims under the California Labor Code with additional penalty exposure. Courts can enter judgments for the full contractual amount plus prejudgment interest, and if the agreement contains a prevailing-party attorney’s fees provision, the company may bear your litigation costs as well.

Do golden parachute provisions survive if my company goes through bankruptcy before the acquisition closes?

This is a complex area of law involving the intersection of California contract law, federal bankruptcy law, and executive compensation regulation. In a Chapter 11 bankruptcy, the company’s obligation to honor pre-bankruptcy contracts is subject to the bankruptcy court’s authority to reject executory contracts. However, rejection gives the counterparty a pre-petition unsecured claim — not a cancellation of the obligation without compensation. For executives with golden parachute agreements at companies in financial distress, early consultation with counsel is essential to protect your position before a bankruptcy filing changes the landscape.

The Bottom Line: Golden Parachutes Are Complex — Get the Structure Right

Golden parachute agreements represent some of the most significant and highest-stakes compensation arrangements in California’s business landscape. Negotiating them well — and enforcing or defending them correctly — requires fluency across employment law, contract law, tax law, and M&A transaction mechanics. Errors in any of these dimensions can cost millions in either direction.

For executives: the value of your golden parachute is not the gross number in the agreement — it is what you actually receive after tax, after disputes, and after the triggering conditions are properly invoked. Understanding your position under Section 280G, having clear ‘good reason’ and triggering event definitions, and knowing your rights under California employment law gives you the leverage to protect what you negotiated.

For employers and acquirers: the cost of a poorly structured golden parachute program extends well beyond the payments themselves — it includes potential excise tax exposure, lost deductions, California wage claim penalties, and litigation risk on every disputed payment. Proactive planning before a transaction, updated 280G analyses, and coordinated equity plan and employment agreement drafting reduce that exposure significantly.

At McLellan Law Group, LLP, our attorneys advise California executives and businesses on employment agreements, change-of-control compensation, executive severance disputes, and business litigation. Whether you are negotiating an executive compensation package, evaluating a golden parachute following a corporate transaction, or facing a dispute over whether and how much was owed, we provide the strategic guidance and litigation capability to protect your interests.

Advertising Material Disclaimer: This article is an advertisement for legal services by McLellan Law Group, LLP. The information provided is for general informational purposes only and does not constitute legal advice. This article does not constitute tax advice; consult a qualified tax professional regarding the federal and state tax implications of any executive compensation arrangement. Reading this article does not create an attorney-client relationship. Responsible Attorney: Claire Melehani, Esq., 20665 4th Street, Suite 202, Saratoga, CA 95070.

Hostile Work Environment in California: Legal Standard & Your Rights (2026)

Mon, 08 Jun 2026 19:27:49 GMT

Hostile Work Environment in California:
How to Recognize It and What to Do

Claire Melehani

Most people who describe their workplace as "hostile" mean it in the ordinary sense, a toxic culture, an abusive manager, constant tension. But a hostile work environment in California has a precise legal meaning, and that definition is both narrower and broader than most employees expect. Narrower, because not every miserable workplace qualifies. Broader, because a single incident can be enough if it is severe enough.

"Hostile work environment" is one of the most commonly misunderstood phrases in employment law. Employees use it to describe workplaces that are stressful, unfair, demeaning, or dysfunctional. Courts use it to describe something specific: a workplace made abusive by harassment tied to a protected characteristic, serious enough to alter the conditions of employment. The gap between those two meanings leaves many employees confused about whether they have a legal claim, and causes others with strong claims to underestimate what the law offers them.

California's Fair Employment and Housing Act (FEHA) provides some of the broadest workplace harassment protections in the country. And a 2024 California Supreme Court decision, Bailey v. San Francisco District Attorney's Office, materially clarified and strengthened the standard, holding that a single severe incident of racial harassment by a coworker can create a legally actionable hostile work environment under the totality of the circumstances.

This guide explains what the law actually requires, what qualifies under California's standard, how to document a hostile work environment claim, and how to take action.

The Colloquial Meaning vs. the Legal Standard

The first thing any hostile work environment lawyer in California will tell you is that most people arrive with the wrong frame. Understanding the gap between how most people use the phrase and what the law actually requires is the essential starting point.

How Most People Use the Phrase

A workplace that is stressful, unfair, or toxic. A manager who is abusive, arbitrary, or plays favorites. A culture of bullying or exclusion. Constant pressure, unreasonable expectations, or chronic disrespect. These are real problems, and they matter, but they do not automatically create a legal claim.

● Difficult or unreasonable management

● Unfair treatment not tied to a protected trait

● General workplace dysfunction or poor culture

● Equal-opportunity bullying (everyone is treated badly)

● Stress, overwork, or unfair performance standards

What California Law Requires

Unwelcome conduct based on a legally protected characteristic, race, sex, age, disability, religion, sexual orientation, and others, that is severe or pervasive enough to alter the conditions of employment and create an abusive working environment for a reasonable person.

● Tied to a protected characteristic

● Subjectively experienced as hostile by the employee

● Objectively hostile to a reasonable person in the same position

● Severe enough, or pervasive enough, to alter conditions of employment

● Attributable to the employer under applicable liability rules

California courts have been explicit that FEHA "is not a general civility code." A harsh boss who is equally unpleasant to everyone doesn't create a legal hostile work environment, however damaging the experience. The legal claim attaches when the hostility is driven by who you are under California's protected categories, not merely how you are treated. That distinction is the threshold inquiry in every case.

The FEHA Legal Standard: What California Law Actually Requires

California's hostile work environment claim arises primarily under Government Code section 12940(j), which makes it unlawful for an employer to harass an employee because of a protected characteristic. Government Code section 12923, added by the legislature in 2018, provides additional interpretive guidance, making explicit that a single incident may be sufficient if it is severe enough, and directing courts to use a totality-of-the-circumstances approach.

To establish a hostile work environment claim under FEHA, an employee must generally show the following elements:

The employee belongs to a protected class or has a protected characteristic
The harassment must be connected to a characteristic protected under FEHA. California's list of protected characteristics is among the broadest in the country.
The employee was subjected to unwelcome conduct
The conduct must be unwelcome, meaning the employee did not solicit or invite it. Conduct voluntarily participated in doesn't qualify. The employee's reaction at the time and any complaints made are relevant to establishing unwelcomeness.
The conduct was based on the protected characteristic
There must be a causal link between the harassment and the protected trait. Conduct that is offensive but not connected to a protected category, general bullying, personality conflicts, management hostility applied equally to all employees, doesn't meet this element.
The conduct was severe or pervasive
Under FEHA, conduct need not be both severe and pervasive. Either is sufficient. A single incident can be actionable if it is sufficiently severe. Repeated, less extreme conduct can be actionable if it is sufficiently pervasive. Courts evaluate frequency, severity, whether the conduct was physically threatening or humiliating, and whether it unreasonably interfered with job performance.
The conduct altered the conditions of employment
The harassment must be severe or pervasive enough to create an objectively and subjectively hostile or abusive work environment. Both components are required: the employee must have actually experienced the environment as hostile, and a reasonable person in the same position would also find it hostile. An employee doesn't have to suffer a formal employment action, a demotion or termination, for the conditions of employment to have been altered.
The employer is liable
Employers are strictly liable for harassment by supervisors that results in a tangible employment action. For supervisor harassment that doesn't result in a tangible action, and for coworker or third-party harassment, employer liability depends on whether the employer knew or should have known of the conduct and failed to take prompt, appropriate corrective action.

Protected Characteristics Under California FEHA

FEHA covers a broader range of protected characteristics than federal law. Harassment based on any of the following can support a hostile work environment claim. Importantly, harassment is prohibited regardless of employer size, even employers with only one employee are covered.

Race & Color
Sex & Gender
Gender Identity & Expression
Sexual Orientation
National Origin & Ancestry
Religion & Creed
Age (40 and over)
Disability
Medical Condition
Pregnancy
Marital Status
Military & Veteran Status

California Supreme Court, July 29, 2024

Bailey v. San Francisco District Attorney's Office (2024) 16 Cal.5th 611

This decision is the most important recent California Supreme Court ruling on hostile work environment claims, and most competitor articles predate it. Here is what happened and why it matters to your case.

Twanda Bailey, an African-American employee of the San Francisco District Attorney's Office, alleged that a coworker used an unambiguous racial epithet directed at her on a single occasion. After reporting the incident, the human resources manager obstructed her complaint, engaged in intimidating conduct, and mouthed "you are going to get it" at Bailey in a parking lot. The trial court and Court of Appeal both granted summary judgment for the City, finding that a single racial slur by a coworker, as opposed to a supervisor, was insufficient as a matter of law to create a hostile work environment.

The California Supreme Court unanimously reversed. Its holdings reshape how California courts analyze harassment claims:

"What matters is looking at the totality of the circumstances when determining whether the conduct is sufficiently severe or pervasive to be actionable. There is no magic number of slurs that creates a hostile work environment."

, Bailey v. San Francisco District Attorney's Office (2024) 16 Cal.5th 611

Key holdings: First, a coworker's single use of an unambiguous racial epithet can, under the totality of the circumstances, be sufficiently severe to create a hostile work environment, prior case law suggesting only supervisor slurs could satisfy the severity threshold was rejected. Second, the Court emphasized that severity must be evaluated from the perspective of a reasonable person in the plaintiff's position, giving full consideration to the specific word used, the identity of the speaker, whether the conduct was directed at the plaintiff, and the broader workplace context. Third, the Court held that an employer's systematic obstruction of an employee's ability to report and address harassment, such as the HR manager's conduct in this case, can independently constitute an adverse employment action supporting a retaliation claim.

What this means for your case : If you have experienced a single severe incident of harassment based on a protected characteristic, a slur, a threatening statement, an act of physical aggression, Bailey confirms you may have a viable FEHA claim even if the incident was isolated and even if it came from a coworker rather than a manager. The analysis focuses on the full picture of what happened and its impact on your working conditions, not on a count of incidents.

What Qualifies, and What doesn't

Conduct that commonly meets the threshold

Repeated derogatory comments, slurs, or epithets targeting a protected characteristic
A single severe incident involving an unambiguous racial, sexual, or other discriminatory epithet
Unwanted sexual advances, propositions, or repeated requests for dates after a clear refusal
Sexually explicit jokes, images, texts, emails, or social media posts visible to workplace colleagues
Physical contact that is unwelcome, groping, grabbing, blocking movement
Persistent mockery, ridicule, or humiliation tied to a disability, age, religion, or other protected trait
Exclusion from meetings, projects, or communications in a pattern tied to a protected characteristic
Threatening or intimidating conduct based on protected status
Displaying offensive materials, posters, cartoons, objects, with discriminatory content
Harassment via electronic channels, texts, email, Slack, or personal social media visible to coworkers, when the conduct is connected to work and the audience includes coworkers

Conduct that typically doesn't meet the threshold

● General rudeness, harsh management style, or difficult workplace relationships not tied to a protected characteristic

● Occasional profanity or coarse language applied equally to all employees

● Personality conflicts, micromanagement, or unfair criticism without a discriminatory dimension

● Isolated rude comments that are not directed at a protected characteristic

● Stressful working conditions, excessive workload, or unreasonable performance expectations applied without discriminatory motive

● A single off-color joke that is not connected to a protected characteristic and is not part of a pattern

The line is not always obvious. Many situations fall in gray areas, conduct that may or may not meet the threshold depending on frequency, context, who delivered it, and the cumulative impact on the working environment. Do not self-diagnose whether your situation rises to the legal standard. The totality-of-circumstances framework means that what looks like a borderline case in isolation may present very differently when all the facts are assembled. This is exactly the kind of analysis an employment attorney performs in an initial consultation.

How to Document a Hostile Work Environment in California

Documentation is what converts a credible experience into a provable legal claim. It is also the single most common gap between employees who recover full value and those who settle for less. Start building your record the moment you recognize a pattern, or immediately after a single severe incident.

Your Hostile Work Environment Documentation Checklist

Keep a contemporaneous incident log. After each incident, write down the date, time, location, exactly what was said or done, who was present, and how it affected you. Use a personal device, not a work computer, and keep the log somewhere your employer cannot access.
Preserve written communications. Screenshot or forward to a personal email account any emails, texts, Slack messages, social media posts, or other communications containing harassing content. Do this immediately, digital evidence disappears quickly when people are terminated or accounts are deactivated.
Note every complaint you make. Record the date, method (email, in-person, HR portal), and content of every complaint you make to HR, a supervisor, or management. If you complained verbally, send a follow-up email to create a written record: "This is to confirm our conversation today in which I reported..."
Document the employer's response. Record how HR or management responded to each complaint, including if they did nothing, minimized the situation, discouraged you from pursuing it, or retaliated. An inadequate response is itself legally significant.
Identify witnesses. Note the names of anyone who witnessed the harassing conduct or was present during related conversations. You do not need to speak with them now, but their names and contact information are valuable.
Keep your performance record. Save copies of positive performance reviews, commendations, and any evaluations that predate your complaint. A sudden deterioration in documented performance following a harassment complaint is a classic pattern that supports both the harassment claim and a retaliation claim.
Request your personnel file. Under Labor Code section 1198.5, you have the right to inspect your personnel records within 30 days of a written request. Exercise this right if you believe your file has been altered or contains pretextual documentation added after your complaint.
Document medical and psychological impact. If the harassment has caused anxiety, depression, sleep disruption, or other physical or psychological symptoms, seek treatment and keep records. Medical documentation of harm materially strengthens emotional distress damages in a FEHA claim.

How to Take Action: Filing a Hostile Work Environment Claim in California

California's FEHA requires employees to exhaust administrative remedies before filing a hostile work environment lawsuit in court. That means filing a complaint with the California Civil Rights Department (CRD) before you can sue. Here is how the process works.

1. Report Internally First (If Safe to Do So)

Before going to the CRD, consider making a formal complaint to HR or management, in writing, and with a record. An employer who receives a harassment complaint and fails to investigate and take corrective action becomes liable for subsequent harassment. An employer who retaliates against you for reporting has committed a separate, independent violation under FEHA section 12940(h). Internal reporting also creates the written record that strengthens any subsequent legal claim. If you reasonably fear retaliation or the harasser is HR itself, as in Bailey, you are not required to exhaust an obviously futile internal process before seeking legal help.

2. Consult an Employment Attorney Before Filing with the CRD

The CRD complaint is a mandatory prerequisite to a FEHA lawsuit, but how it is framed matters. The complaint should accurately describe every incident, every protected characteristic at issue, and every adverse consequence you have experienced. Omissions or inaccuracies in the CRD complaint can create problems in subsequent litigation. An experienced employment attorney will help you draft a complaint that preserves all viable theories, maximizes the scope of the administrative investigation, and positions you well for any subsequent lawsuit.

3. File a Complaint with the California Civil Rights Department (CRD)

You must file your FEHA harassment complaint with the CRD within three years of the last harassing incident. You can file online through the California Civil Rights System (CCRS), by mail, by email, or in person at a CRD office. When you file, you have two options: request an immediate right-to-sue notice (allowing you to proceed directly to court), or allow the CRD to investigate. Requesting immediate right to sue is common when the employee is already represented by counsel and ready to litigate. CRD investigation can be valuable for obtaining documents and witness accounts, but it adds time and the CRD may decline to take the case. Filing with the CRD automatically cross-files with the EEOC, preserving federal claims simultaneously.

4. File a FEHA Lawsuit in Superior Court

Once the CRD issues a right-to-sue notice, you have one year to file a civil lawsuit in California Superior Court. FEHA provides for back pay, front pay, emotional distress damages, punitive damages where the employer acted with malice or oppression, and mandatory attorney's fees for prevailing plaintiffs. The fee-shifting provision is significant: it means a well-supported FEHA claim is economically viable for an employee even when the economic damages alone are modest, because the employer faces the prospect of paying your legal fees if you prevail.

5 Protect Yourself from Retaliation, and Document It If It Occurs

FEHA section 12940(h) independently prohibits retaliation for complaining about harassment or participating in a FEHA investigation. If your employer demotes you, reduces your hours, gives you a sudden negative performance review, transfers you to an unfavorable assignment, or terminates you after you complain, that retaliation is a separate legal violation, on top of the underlying harassment claim. Document every adverse change in your working conditions after your complaint. Under SB 497 (effective January 1, 2024), if adverse action occurs within 90 days of protected activity under covered Labor Code sections, a rebuttable presumption of retaliation applies.

Frequently Asked Questions

Does the harassment have to come from my supervisor to have a legal claim?

No. California FEHA prohibits harassment by supervisors, coworkers, and third parties, including clients, customers, and vendors. The difference is in how employer liability is established, not whether a claim exists. For supervisor harassment that results in a tangible employment action, the employer is strictly liable, no other showing is needed. For coworker or third-party harassment, you must show the employer knew or should have known about the conduct and failed to take prompt, appropriate corrective action. The 2024 California Supreme Court decision in Bailey v. San Francisco District Attorney's Office (2024) 16 Cal.5th 611 made this explicit, holding that a coworker's single use of an unambiguous racial slur can constitute actionable harassment under the totality of the circumstances.

My employer has an anti-harassment policy. Does that protect them from liability?

Having a policy is not enough, the policy must actually work. An employer who has an anti-harassment policy but fails to investigate complaints, takes no corrective action, or tolerates ongoing harassment despite knowing about it remains liable. In Bailey, the City of San Francisco had written policies, but the HR manager's active obstruction of Bailey's complaint undermined those policies entirely, and the Court found that conduct raised triable issues of employer liability. An employer's affirmative defense based on reasonable preventive and corrective measures is available in cases involving supervisor harassment that doesn't result in a tangible employment action, but only if the defense is genuinely supported by facts, not just paperwork.

I still work at the company. Can I file a hostile work environment claim without leaving?

Yes. A hostile work environment claim doesn't require you to have been fired, resigned, or suffered a formal employment action. The claim is about the conditions of your employment while you are still working, not about how the relationship ended. Many employees file CRD complaints and pursue legal claims while remaining employed. This requires careful documentation of ongoing harassment and any retaliation that follows the complaint. Being represented by an attorney during this process, rather than navigating it alone, materially reduces the risk that your employer's conduct during the litigation process will harm your position.

What if the harassment is happening online or on social media, not in the office?

It can still create a hostile work environment. The Ninth Circuit's 2024 decision in Okonowsky v. Garland confirmed that harassing content on a coworker's personal social media account can support a hostile work environment claim when the audience includes coworkers and the conduct carries over into the working environment. The relevant question is not where or when the harassing conduct occurs, but whether it creates a hostile atmosphere in the workplace that affects the target's ability to work. Digital harassment that targets protected characteristics, whether via text, email, Slack, or social media, should be treated with the same seriousness as in-person conduct, and should be documented and reported in the same way.

What can I recover if I win a hostile work environment claim in California?

FEHA provides a broad range of remedies for prevailing plaintiffs. Economic damages include back pay and front pay if the harassment led to a constructive discharge or other loss of income. Emotional distress damages, compensation for anxiety, depression, humiliation, and psychological harm, are uncapped under FEHA and can be substantial in cases involving severe or prolonged harassment. Punitive damages are available where the employer's conduct was malicious, oppressive, or fraudulent under Civil Code section 3294. And importantly, FEHA requires the employer to pay a prevailing employee's attorney's fees and costs, which means your legal fees become the employer's problem if you win, creating real settlement leverage even in cases where the direct economic damages are modest.

My workplace is awful, but I'm not sure it's tied to a protected characteristic. Do I still have options?

Potentially yes, depending on the facts. California doesn't have a standalone workplace bullying law, so general mistreatment unconnected to a protected characteristic doesn't give rise to a FEHA claim. However, employees who experience a toxic workplace should consider: whether wage and hour violations are also occurring (which support separate claims regardless of harassment); whether protected activity, filing a complaint, requesting leave, reporting a safety violation, triggered the mistreatment (which may support a retaliation claim); and whether the pattern of treatment, while appearing facially neutral, disproportionately affects employees of a particular protected group (which may support a disparate impact discrimination claim). The presence or absence of a protected characteristic connection is often the central factual question, and it deserves careful analysis rather than a quick self-assessment.

The Bottom Line: The Legal Threshold Is Both Harder and Easier Than You Think

Harder, because not every toxic workplace qualifies. The connection to a protected characteristic, and the severity or pervasiveness of the conduct, are genuine legal requirements that courts take seriously. Many employees who describe their workplaces as "hostile" in the ordinary sense do not have FEHA claims.

Easier, because a single incident can be enough if it is severe enough, coworker harassment is fully actionable, digital harassment counts, and the totality-of-circumstances framework means context matters. The California Supreme Court's 2024 decision in Bailey reinforced that courts must look at the full picture, not check boxes for frequency.

The most important thing you can do if you believe you are experiencing a legally hostile work environment is to start documenting immediately, avoid signing anything your employer presents without legal review, and consult an employment attorney before the situation escalates further. At McLellan Law Group, LLP , our employment attorneys evaluate hostile work environments and FEHA harassment claims throughout California. We will give you an honest assessment of your situation, help you understand whether what you are experiencing meets the legal threshold, and advise you on the most strategic path forward.

Not Sure If Your Workplace Situation Rises to a Legal Claim?

That is exactly what an initial consultation is for. Let us evaluate your facts and give you a clear picture of your options under California law, before the situation gets worse or evidence disappears.

Request a Complimentary Consultation

ADVERTISING MATERIAL DISCLAIMER - This communication is an advertisement for legal services by McLellan Law Group, LLP. The content is intended for informational purposes only and should not be construed as legal advice. Each case and its facts are unique, and the outcomes mentioned in this advertisement, if any, are not guarantees of future results. Responsible Lawyer: Claire Melehani, Esq., 20665 4th Street, Suite 202, Saratoga, CA 95070.

California’s WARN Act in the Age of Mass Layoffs

Tue, 02 Jun 2026 19:41:08 GMT

California’s WARN Act in the

Age of Mass Layoffs

SB 617’s New Notice Requirements, the Silicon Valley Workforce Reduction Wave,

and What California Practitioners Need to Know in 2026

Claire Melehani

California’s Worker Adjustment and Retraining Notification Act has long set a national standard for mass layoff protections. In 2026, two developments have elevated its practical significance to a new level: Senate Bill 617, effective January 1, 2026, added four new mandatory notice content requirements that many employers’ existing templates do not satisfy; and the ongoing Silicon Valley workforce reduction wave — affecting Oracle, Meta, Amazon, Google, Block, and dozens of smaller technology companies — has generated a surge of compliance failures and litigation exposure. This article examines the current statutory framework, the precise requirements of the SB 617 amendments, the penalty structure, the recognized exceptions, and the practice considerations most relevant to California civil litigators representing employees and employers in this environment.

CAL-WARN ACT 2026 — KEY FIGURES AT A GLANCE

Employer coverage threshold: 75 or more employees (full-time and part-time combined) — Lab. Code, § 1400(a)
Required notice period: 60 calendar days advance written notice before any qualifying event
Mass layoff trigger: 50 or more employees at a single establishment within any 30-day period
Maximum penalty per employee: 60 days back pay + full benefits value + $500/day civil penalty — Lab. Code, §§ 1402–1402.5
SB 617 effective date: January 1, 2026 — applies to all notices issued on or after that date
Governing statutes: Cal. Lab. Code, §§ 1400–1408 (as amended by SB 617, eff. Jan. 1, 2026)

I. Introduction: Why the Cal-WARN Act Commands Practitioner Attention in 2026

The California Worker Adjustment and Retraining Notification Act, codified in Labor Code sections 1400 through 1408, has been the operative mass layoff notice statute for California employers since 2003. Its requirements have remained substantially stable for two decades, and compliance programs at larger employers had, in many cases, been reduced to a template exercise. That template approach is no longer adequate.

Governor Newsom signed Senate Bill 617 on October 1, 2025, amending Labor Code section 1401 to add four new mandatory categories of content to every Cal-WARN notice issued on or after January 1, 2026. An employer who issues a facially timely notice — delivered 60 days before the layoff — but omits any of the four new SB 617 disclosures has issued a legally deficient notice. Each day of deficiency is a separate violation. The back pay liability is per employee. The civil penalty runs daily. And California’s one-way attorney’s fee provision, which awards fees to prevailing employees, applies to WARN Act litigation.

These developments coincide with the most significant wave of California technology-sector workforce reductions in recent memory. Oracle eliminated approximately 1,200 California positions in early 2026. Meta, Amazon, Block, Google, and Pinterest have each announced substantial reductions with significant California headcount impact. Publicly available WARN Act filings — searchable through the California Employment Development Department — reveal a compliance landscape that ranges from full compliance to apparent same-day notice to filings that appear to omit the SB 617 required disclosures entirely.

For California practitioners advising employers undertaking workforce reductions, or representing employees affected by them, a current command of the statute’s requirements, exceptions, and penalty mechanics is indispensable. This article provides that framework.

II. The Statutory Framework: Who Is Covered and What Is Required

The Cal-WARN Act applies to any employer that operates a “covered establishment” — defined in Labor Code section 1400(a) as any industrial or commercial facility or part thereof that employs or has employed 75 or more persons within the preceding 12 months. Critically, both full-time and part-time employees count toward the 75-person threshold. This distinguishes Cal-WARN from the federal WARN Act, which excludes part-time workers from coverage calculations.

Triggering Events

Three categories of employer action trigger the 60-day notice obligation under Labor Code section 1401. A mass layoff is a layoff of 50 or more employees at a single covered establishment within any 30-day period, excluding employees who have worked fewer than six months in the preceding 12 months or who work fewer than 20 hours per week. A relocation is the transfer of all or substantially all of a covered establishment’s operations to a different location 100 miles or more distant. A termination or plant closure is the cessation of all or substantially all industrial or commercial operations at a covered establishment.

Notice Recipients

Written notice must be delivered simultaneously to four recipients: each affected employee or their exclusive representative; the Employment Development Department; the local workforce development board covering the affected facility’s location; and the chief elected official of the city or county in which the establishment is located. The simultaneous delivery requirement is not merely procedural — deficient or incomplete delivery to any required recipient can constitute an independent violation.

Remote Workers: A Critical Post-Pandemic Issue

The question of whether remote employees trigger Cal-WARN coverage has become increasingly significant. California courts and the Labor Commissioner have consistently treated remote employees who are supervised by or administratively assigned to a California facility as counting toward the establishment’s employee threshold. An employer with no traditional California office but 75 or more California-based remote workers may be subject to Cal-WARN obligations on a qualifying workforce reduction — a result that many multi-state technology employers with distributed California workforces have not adequately planned for.

PRACTICE POINTER — EMPLOYEE COUNTING

Counsel advising employers on WARN Act compliance should audit the employee count methodology before any workforce reduction decision is finalized. The relevant question is not how many full-time employees are assigned to a California address — it is how many total employees (full-time and part-time) have worked at or in connection with a covered California establishment in the preceding 12 months. Errors in this calculation at the threshold level eliminate the entire compliance obligation in the employer’s view, and create the entire liability exposure in the employee’s view, when the actual count exceeds 74.

III. The 2026 SB 617 Amendments: New Mandatory Notice Content

STATUTORY AMENDMENT — EFFECTIVE JANUARY 1, 2026

Senate Bill 617, signed October 1, 2025, amended Labor Code section 1401 to add four new mandatory categories of disclosure to every Cal-WARN notice issued on or after January 1, 2026. The 60-day timing requirement is unchanged. The definitions of “mass layoff,” “relocation,” and “termination” are unchanged. What changed is the minimum content every compliant notice must contain.

Workforce development board coordination statement. Every notice must affirmatively state whether the employer intends to coordinate rapid-response orientation services through the local workforce development board, through another entity, or not at all. This is a transparency obligation rather than a mandate to fund services — but if the employer represents that it will coordinate services, it must arrange them within 30 days of the notice date. A commitment followed by non-performance creates independent compliance exposure beyond the original notice deficiency.
Workforce development board contact information. The notice must include a functioning email address and telephone number for the local workforce development board covering the facility’s county. The “functioning” requirement is literal — a disconnected number or incorrect email address is a deficient disclosure.
Standardized rapid-response services language. The notice must include the specific standardized language, approved by the EDD and the local workforce board, directing workers to America’s Job Center of California locations and describing available job placement and retraining services. Generic paraphrasing of this requirement does not satisfy it; the approved language must appear verbatim.
CalFresh program disclosure. Every notice must include a brief description of the CalFresh food-assistance program, the CalFresh helpline number, and a link to the program’s official website. The legislature’s inclusion of this requirement reflects a documented relationship between mass layoff events and immediate food insecurity among displaced workers.

The content-deficiency trap. The most significant compliance risk created by SB 617 is the content-deficiency trap: an employer that issued a timely 60-day notice using a pre-2026 template has issued a non-compliant notice under the amended statute. The notice satisfies the timing requirement but fails the content requirement. Each calendar day of the deficiency period may be treated as a separate violation for penalty purposes under Labor Code section 1402. Employers who have already issued post-January 1, 2026 notices using legacy templates should conduct an immediate compliance review.

IV. Cal-WARN vs. the Federal WARN Act: Why California Controls

In any California mass layoff situation, the Cal-WARN Act is the operative and more demanding standard. Federal WARN Act compliance is not a defense to a Cal-WARN violation — an employer may satisfy 29 U.S.C. § 2101 in every respect and still be in material violation of California Labor Code section 1401. The structural differences between the two statutes are significant enough that practitioners who default to federal WARN Act analysis when evaluating California layoffs will systematically underestimate their clients’ exposure and rights.

California covers employers with 75 or more employees (versus 100 under federal law) and counts part-time workers toward that threshold (federal law generally does not). California’s mass layoff trigger is 50 employees at a single location — versus 500 under federal law, or 50 if they represent 33% of the workforce. California’s attorney’s fee provision is one-way: prevailing employees recover fees, employers cannot. And California has no “faltering company” exception.

The absence of a “faltering company” exception in California merits particular emphasis. Under federal law, an employer may provide shortened notice when actively seeking capital or business that, if obtained, would have allowed the employer to avoid or postpone the shutdown, and when providing full notice would have precluded obtaining that capital or business. California recognizes no equivalent exception. Financial distress — however acute — does not excuse or shorten the 60-day notice obligation under Cal-WARN. Practitioners advising financially distressed employers who are contemplating workforce reductions must plan for the full 60-day window regardless of the employer’s cash position.

V. The Penalty Structure: Back Pay, Lost Benefits, Civil Penalties, and Attorney’s Fees

Labor Code sections 1402 and 1402.5 set out the Cal-WARN Act’s penalty framework. The statute creates three independent categories of liability that run simultaneously from the date of violation.

“An employer who orders a mass layoff, relocation, or termination in violation of this chapter shall be liable to each employee who suffers a loss of wages, benefits, and the like as a result of the violation for back pay and benefits for each day of the violation, up to a maximum of 60 days.” — Cal. Lab. Code, § 1402(a) (quoted and verified)

Back Pay

Each affected employee is entitled to back pay for each day of violation — calculated at the higher of the employee’s final regular rate of compensation or the average regular rate received during the last three years of employment — up to a maximum of 60 days. For a high-wage Silicon Valley workforce, this figure can be substantial on a per-employee basis. Multiplied across a covered mass layoff, the aggregate back pay exposure drives the largest single component of total liability.

Lost Benefits

In addition to back pay, the employer is liable for the value of benefits the employee would have received during the violation period — including the cost of medical expenses that would have been covered under employer-provided health insurance. This is not a premium reimbursement; it is the full economic value of coverage the employee actually lost. In cases where laid-off workers incurred actual medical expenses during the gap period, those costs may be recoverable as lost benefit value.

Civil Penalty

Separate from back pay and benefits, Labor Code section 1402.5 imposes a civil penalty of up to $500 per day for each day the employer fails to provide adequate notice. This penalty is payable to the city or county in which the affected establishment is located — not to the individual employees. The civil penalty may be avoided entirely if the employer pays each affected employee the full back pay and benefits owed within three weeks of the ordering of the mass layoff, relocation, or termination.

Attorney’s Fees and the Fee-Shifting Asymmetry

Cal-WARN provides one-way fee-shifting: a prevailing employee recovers attorney’s fees from the employer; a prevailing employer does not recover fees from the employee. An employer defending a Cal-WARN case with 100 affected employees faces not only per-employee back pay and benefits liability but the prospect of a prevailing plaintiff’s attorney’s fees award that may exceed the aggregate economic damages. This exposure makes early resolution — and proactive compliance — far more cost-effective than post-hoc defense.

Illustrative Exposure: 200-Employee Layoff, No Notice

For context on scale: a 200-employee layoff with no notice and an average daily wage of $250 generates back pay exposure of approximately $3,000,000 (200 employees × 60 days × $250). Lost health benefits at approximately $50 per employee per day add approximately $600,000. The civil penalty runs at $500 per day for up to 60 days, payable to the city or county. Attorney’s fees are additional. Silicon Valley technology workforces — where average compensation commonly exceeds $200,000 annually — generate proportionally larger per-employee back pay figures. The aggregate exposure in a 1,000-employee mass layoff at median California technology sector wages can reach eight figures.

The Severance Agreement Intersection: OWBPA and Waiver

A recurring issue in California mass layoff litigation is whether an executed severance agreement extinguished the employee’s Cal-WARN back pay claims. The answer requires analysis of both the release’s specific language and its compliance with the Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. § 626(f), for employees over 40.

Under OWBPA, a knowing and voluntary waiver of Age Discrimination in Employment Act rights in connection with a group layoff or exit incentive program requires 45 days for the employee to consider the agreement — not 21 days. The 21-day period applies only to individual terminations outside of a group program. Because Cal-WARN violations arise almost exclusively in the context of group layoffs and mass exit incentive programs, the operative OWBPA review period in most Cal-WARN cases is 45 days, with a 7-day revocation period following execution. A waiver presented in a mass layoff context that provides only 21 days for review does not satisfy OWBPA’s requirements for employees over 40, and the ADEA waiver — and potentially the broader release — may be voidable.

Even for a release that satisfies OWBPA’s procedural requirements, the substantive question remains whether the release’s language was sufficiently specific to encompass the employee’s Cal-WARN back pay claim. General releases of “all claims” are typically construed broadly in California, but claims the employee did not know they had — including WARN Act back pay claims where the employer did not disclose its compliance failure — may fall outside the scope of a voluntary release. This is an active area of litigation warranting careful case-by-case analysis.

VI. The Recognized Exceptions: Narrow, Employer-Borne, and Strictly Construed

California recognizes three exceptions to the 60-day notice requirement. Each is narrowly construed, the burden of establishing the exception falls entirely on the employer, and none is self-executing — an employer invoking an exception must still provide as much notice as was practicable given the circumstances. Practitioners should counsel employer clients that exception reliance is a litigation position, not a safe harbor that insulates against all liability.

1. Unforeseeable Business Circumstances

An employer may provide less than 60 days’ notice when the qualifying event is caused by business circumstances that were not reasonably foreseeable at the time full advance notice would have been required. The circumstances must be sudden, dramatic, and not the product of an ongoing business deterioration that the employer failed to plan around. California courts require proof both that the event was genuinely unforeseeable and that notice was given as soon as practicable once the event became foreseeable.

The 2026 tech layoff wave has generated recurring disputes over this exception, with employers arguing that rapid changes in AI-driven market conditions constituted unforeseeable circumstances. Courts have been skeptical where the employer had been experiencing declining performance or restructuring pressures for months before the layoff announcement, distinguishing genuine market shocks from long-developing financial trends.

2. Natural Disaster

A mass layoff caused directly by a flood, earthquake, drought, storm, tidal wave, or similar natural disaster may trigger this exception. The causal relationship must be direct — a natural disaster that contributed to an already-distressed employer’s decision to close does not satisfy the exception. As with the unforeseeable circumstances exception, the employer must demonstrate it gave as much notice as was practicable under the circumstances.

3. Physical Calamity or Act of War

A physical calamity — fire, flood, or sudden property destruction — or an act of war that directly causes the qualifying employment action may excuse full notice compliance. The directness requirement and the “as much notice as practicable” residual obligation apply equally here.

PRACTICE POINTER — THE ABSENT EXCEPTION

The federal WARN Act’s “faltering company” exception — permitting shortened notice when an employer is actively seeking capital or business that, if obtained, would have forestalled the shutdown, and when providing full notice would have jeopardized those efforts — does not exist in California. The California legislature’s deliberate omission of this exception is not a drafting gap; it reflects a policy judgment that financial distress does not diminish the employee’s need for notice. Employer counsel who cite the federal exception in California proceedings, or who rely on it in advising pre-layoff planning, expose their clients to liability they could have avoided with accurate California-specific analysis.

VII. Identifying and Pursuing Cal-WARN Claims: A Practitioner’s Framework for Employee Representation

Practitioners representing laid-off California workers should build the following framework into their initial case intake for any client who was terminated as part of a mass layoff.

Step 1. Establish Coverage: Employer Size and Establishment Threshold

Confirm that the employer met the 75-employee threshold at the time of the layoff. Search the California EDD’s publicly available WARN Act filing database for any notice the employer may have filed — including when it was filed relative to the layoff date. A filing submitted on or after the layoff date is per se non-compliant on timing. A timely filing that omits SB 617 disclosures may be non-compliant on content. The absence of any filing in the database is powerful evidence, though not conclusive.

Step 2. Confirm the Qualifying Event: Mass Layoff of 50 or More

Determine the number of employees laid off at the specific establishment within the 30-day period surrounding the client’s termination. Corporate-wide announcement figures can be misleading — the triggering threshold is facility-specific, not enterprise-wide. Public WARN filings typically identify the affected location and the number of affected employees. In litigation, payroll records obtained through discovery will establish both the facility-level count and the precise dates of each termination, which matters for the 30-day aggregation window.

Step 3. Quantify Back Pay and Benefits Exposure

Calculate back pay at the higher of the employee’s final regular rate or their three-year average, multiplied by the number of days of violation up to 60. Separately calculate the value of lost benefits during the same period. For workers who incurred actual medical expenses during the gap period, document those costs as recoverable benefit losses. In high-wage California technology sector cases, per-employee back pay exposure routinely exceeds $25,000 to $50,000, making individual representation economically viable alongside or apart from class or collective proceedings.

Step 4. Evaluate the Severance Release

Assess whether the client signed a severance agreement and whether its release language purports to cover the Cal-WARN back pay claim. For clients over 40, evaluate OWBPA compliance: in a group layoff or exit incentive program, a valid ADEA waiver requires 45 days for review and 7 days for revocation — not 21 days. A deficient OWBPA review period may render the ADEA waiver and, depending on the release’s severability language, the broader release voidable. Do not assume a signed release eliminated all claims without a careful language review and OWBPA compliance analysis.

Step 5. Assess the Limitations Period and Aggregate the Claim Portfolio

California courts have applied a three-year statute of limitations to Cal-WARN back pay claims under Code of Civil Procedure section 338. The clock runs from the date of violation. In addition to the Cal-WARN claim, a client affected by a mass layoff may have independent claims for wrongful termination in violation of public policy, age discrimination under FEHA, retaliation for prior protected activity, PAGA wage and hour violations, and OWBPA violations arising from the severance agreement process. A complete intake evaluation at the outset — rather than a WARN-only analysis — maximizes total recovery and settlement leverage.

VIII. Employer Compliance in 2026: The SB 617 Pre-Layoff Checklist

For practitioners advising employers, the SB 617 amendments create a discrete set of template-level compliance obligations that must be addressed before the 60-day window opens. The following checklist reflects the minimum steps required for a legally compliant Cal-WARN notice under the statute as currently in effect.

Confirm employee count and threshold applicability. Count all employees — full-time and part-time — who have worked at or in connection with the affected California establishment in the preceding 12 months. Determine whether the planned action reaches the 50-employee mass layoff trigger.
Identify all required notice recipients. Identify affected employees or their representative; the EDD; the specific local workforce development board for the affected county; and the chief elected official of the relevant city and county. Multi-site reductions require identifying the correct workforce development board for each affected location.
Update the notice template for SB 617. Verify that the employer’s existing Cal-WARN notice template includes all four SB 617-required elements: the workforce board coordination statement; the workforce board’s current contact information; the EDD-approved standardized rapid-response services language; and the CalFresh program description, helpline, and website link. Any template predating January 1, 2026 should be presumed non-compliant and revised before use.
Determine workforce board coordination posture. Decide in advance whether the employer will commit to coordinating rapid-response services — and if so, initiate contact with the local workforce development board well before the 60-day notice is issued. A commitment in the notice that is not fulfilled within 30 days creates independent compliance exposure.
Sequence the notice delivery correctly. Deliver the written notice to all required recipients simultaneously, not sequentially. The 60-day clock runs from the date of delivery. Build delivery confirmation documentation — return receipts, delivery confirmations, timestamped emails — into the compliance file. Oral notice and informal communications do not satisfy the written notice requirement.
Coordinate notice timing with internal communications and external announcements. Layoff announcements to managers, leaks to the press, or disclosures in securities filings that precede or coincide with the statutory notice create ambiguity about when the notice clock actually started. Counsel should be involved in the sequencing of all communications before the 60-day window opens.

IX. Conclusion: The Gap Between Template Compliance and Legal Compliance

The most consequential compliance failure pattern the 2026 layoff wave has revealed is not employers who deliberately disregarded the Cal-WARN Act. It is employers who believed their existing compliance programs were adequate because they had used those programs in prior workforce reductions — and because prior reductions had not generated litigation. SB 617 changed what an adequate notice must contain. The law that applied to a 2024 layoff does not, in this one important respect, apply to a 2026 layoff.

For practitioners on the employee side, the 2026 environment presents a meaningful enforcement opportunity. The confluence of high-wage workforce reductions, the SB 617 content-deficiency trap, apparent non-compliance in several high-profile layoff situations, and one-way attorney’s fee-shifting creates a favorable case economics picture for well-documented Cal-WARN claims — particularly in combination with the other statutory claims that arise from the same layoff event.

For practitioners on the employer side, the path to full compliance in 2026 is neither expensive nor technically complex. It requires updating a template, identifying a local workforce board contact, and building a 60-day planning window into every workforce reduction process. The cost of that compliance, measured in attorney time and HR preparation, is a rounding error compared to the back pay, civil penalty, and fee-shifting exposure that a content-deficient or untimely notice creates.

The California WARN Act has always been the governing standard for mass layoff notice in this state. In 2026, with SB 617 in effect and the volume of qualifying layoffs at a generational high, it demands the same level of practitioner command as any other active area of California employment law.

ABOUT THE AUTHOR

Claire Melehani, Esq. is a founding partner at McLellan Law Group, LLP, a California civil litigation firm based in Campbell, California. She practices employment law, business litigation, real estate litigation, trust and probate, and civil appeals, and serves as the 2026 President of the Santa Clara County Bar Association. She can be reached at mclellanlawgroup.com.

McLellan Law Group, LLP represents employees and employers in California WARN Act matters, employment litigation, and business disputes throughout Silicon Valley and the Bay Area.

The views expressed in this article are those of the author and do not constitute the official position of the American Inns of Court or any Inn of Court chapter. This article is intended for educational and informational purposes for legal practitioners and does not constitute legal advice. Readers should consult qualified counsel regarding the application of any statute or legal principle to specific client facts. Advertising Material: This article was prepared by McLellan Law Group, LLP. Responsible Attorney: Claire Melehani, Esq., 900 E. Hamilton Ave., Suite 100, Campbell, CA 95008.

Wage Theft in California: How to Recover Unpaid Wages (2026 Guide)

Mon, 01 Jun 2026 17:08:11 GMT

Wage Theft in California: Your Rights and How to Recover Unpaid Wages

Claire Melehani

Wage theft in California is not always a stolen paycheck. It can be an off-the-clock policy that quietly strips 15 minutes from every shift. A rounding practice that systematically favors the employer. A misclassification that eliminates overtime entirely. California law treats all of it the same, and gives workers meaningful tools to recover what they are owed, plus penalties on top.

California has some of the strongest wage protection laws in the country, and some of the highest rates of wage theft. The state's Bureau of Field Enforcement (BOFE) issued more than 2,200 citations for labor law violations between January 2022 and November 2025, recovering over $49.1 million in stolen wages, damages, and interest on behalf of California workers. A state audit in 2024 found a backlog of 47,000 unresolved wage claims at the Labor Commissioner's Office, cases taking six times longer to resolve than the four-month standard set by state law.

What that data reflects is not a shortage of violations. It reflects how common wage theft is across California industries, from restaurants and construction to healthcare, retail, and tech, and how inadequately resourced the administrative enforcement system is to keep up with it.

Workers who know their rights and act quickly recover far more than those who go it alone. Having experienced legal counsel makes the difference even bigger. This guide explains what wage theft looks like under California law, which statutes protect you, what you can recover, and how to pursue your claim most effectively.

$49.1M+

Recovered by BOFE in stolen wages from Jan. 2022 – Nov. 2025

47,000

Unresolved wage claims backlogged at the Labor Commissioner's Office (2024 audit)

6×

Longer than the statutory 4-month target that wage claims currently take to resolve

What Is Wage Theft Under California Law?

California Labor Code section 200(a) defines wages broadly as "all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation." That definition encompasses far more than hourly pay; it includes overtime, bonuses, commissions, accrued vacation, expense reimbursements, and other earned compensation.

Wage theft occurs any time an employer fails to pay compensation that was earned and owed under California law or a valid employment agreement. It doesn't require intent on the employer's part to be legally actionable, though willful violations trigger higher penalties. The most common forms of wage theft in California fall into the following categories.

Unpaid Overtime

Lab. Code, §§ 510, 1194

California requires overtime at 1.5 times the regular rate for hours over 8 in a workday or 40 in a workweek, and at 2 times the regular rate for hours over 12 in a workday or over 8 on the seventh consecutive workday. Many employers miscalculate overtime by omitting bonuses or commissions from the regular rate, or by averaging hours across weeks. Both are violations.

Meal and Rest Break Violations

Lab. Code, §§ 226.7, 512

California requires an uninterrupted 30-minute unpaid meal break for shifts over five hours, a second meal break for shifts over ten hours, and a paid 10-minute rest break for every four hours worked. An employer who fails to provide a compliant break owes one hour of pay at the employee's regular rate for each missed break, per day, per violation type.

Off-the-Clock Work

Lab. Code, §§ 510, 1194; IWC Wage Orders

Requiring employees to work before clocking in, after clocking out, through meal breaks, or during mandatory training without compensation is wage theft. Common examples include pre-shift equipment setup, post-shift cleaning, mandatory meetings without pay, and automatic time-deduction policies that don't reflect actual break time taken.

Minimum Wage Violations

Lab. Code, §§ 1194, 1194.2, 1197

California's statewide minimum wage is $16.90 per hour as of 2026. Many cities and counties have higher local rates. Minimum wage violations are particularly powerful claims because they trigger liquidated damages equal to the unpaid wages, effectively doubling recovery, unless the employer can prove good faith and reasonable grounds for its belief that no violation occurred.

Unpaid Commissions and Bonuses

Lab. Code, §§ 200, 204, 2751

Once an employee satisfies all conditions to earn a commission or a nondiscretionary bonus, it becomes a wage. Failure to pay it is wage theft. Commission agreements must be in writing (Lab. Code, § 2751). Employers cannot retroactively change commission terms to avoid paying earned compensation, and unpaid commissions carry the same remedies as unpaid wages.

Employee Misclassification

Lab. Code, §§ 226.8, 2750.3; IWC Wage Orders

Misclassifying an employee as an independent contractor eliminates overtime, meal and rest break protections, workers' compensation, and expense reimbursement obligations, all at once. California's ABC test makes misclassification difficult to defend. Workers misclassified as contractors can recover all wages owed as if they had been employees throughout the relationship.

Late or Missing Final Paychecks

Lab. Code, §§ 201, 202, 203

When you are fired, your final paycheck is due immediately. When you resign with at least 72 hours' notice, it is also due immediately. When you resign without notice, it is due within 72 hours. An employer who willfully fails to pay final wages on time owes waiting time penalties, your full daily wage rate for each day the paycheck is late, up to 30 days. That penalty alone can be substantial.

Unlawful Deductions and Expense Theft

Lab. Code, §§ 221, 2802

California employers generally cannot deduct wages for business losses, equipment, uniforms, or cash register shortages. They must also reimburse employees for all necessary business expenses, including mileage at the IRS rate when personal vehicles are required for work. Unlawful deductions and failure to reimburse are both recoverable as unpaid wages.

Tip Theft

Lab. Code, §§ 351, 353

California prohibits employers, managers, and supervisors from taking, collecting, or retaining any portion of tips left for employees. Tips belong entirely to the workers who serve the customers. Employers who skim or pool tips improperly owe the full amount taken, plus an equal amount as a statutory penalty, plus attorneys' fees.

Deficient Wage Statements

Lab. Code, § 226

California employers must provide itemized wage statements each pay period showing gross wages, hours worked, deductions, net wages, the pay period dates, the employer's name and address, and the employee's name. Knowing and intentional failures to provide accurate wage statements carry penalties of $50 for the first violation and $100 for subsequent violations per employee, up to a $4,000 maximum per employee.

What You Can Recover: California's Wage Theft Remedies

California's wage and hour statutes layer multiple remedies on top of the unpaid wages themselves. Understanding the full measure of potential recovery, not just the base wages owed, is essential to evaluating the strength and value of a wage theft claim.

Statutes of limitation apply, and they vary. The deadline to bring a wage claim depends on the type of violation:

Statutory wage claims (overtime, minimum wage, meal and rest breaks): 3 years from the date of each violation
Written contract claims: 4 years
Oral contract claims: 2 years
Waiting time penalties (Lab. Code, § 203): 3 years
PAGA claims: 1 year from the date of the violation personally experienced by the plaintiff (post-June 2024 reform)

Multiple clocks may run simultaneously if your claim spans more than one legal theory. A missed deadline can permanently bar a claim regardless of its merits.

How to File a Wage Claim in California

California workers have two primary paths to recover unpaid wages: an administrative claim with the Labor Commissioner's Office, or a civil lawsuit in Superior Court. The right path depends on the size and complexity of your claim, the number of violations involved, and your goals. Many workers pursue both routes strategically.

Before You File: What to Gather

The strength of a wage claim depends directly on documentation. Gather as much of the following as you can before filing anything:

Pay stubs and wage statements for the full period of violations
Time records, time cards, or punch records, including any you kept personally
Any written employment agreement, offer letter, or commission agreement
Texts, emails, or written communications from supervisors about hours, pay, or breaks
Records of any complaints you made about pay practices and your employer's response
The employer's full legal name, address, and any parent company names
Contact information for any coworkers who experienced the same violations

If you no longer have access to pay records, do not assume that ends your claim. Under Labor Code section 1174, employers are required to maintain accurate payroll records and make them available upon request. Your attorney can obtain these through discovery if an administrative claim or lawsuit is filed.

1. File a Wage Claim with the Labor Commissioner (DLSE)

You can file a wage claim with the Labor Commissioner online, by mail, by email, or in person at any DLSE office. No filing fee. The Labor Commissioner investigates and schedules a settlement conference, and if that fails, a hearing before a hearing officer who can order wages, penalties, and interest paid. The process is free to the worker and doesn't require an attorney, making it accessible for smaller claims. However, the current backlog means administrative claims can take years to resolve, and the collection rate on administrative awards is historically poor, only about 12% of successful administrative claims result in actual payment, according to a 2024 state audit.

2. File a Civil Lawsuit in Superior Court

For larger claims, systemic violations, or cases involving PAGA penalties, filing directly in Superior Court (or alongside a Labor Commissioner claim) is often the stronger strategy. Civil litigation allows full discovery, access to the employer's payroll records, class action or PAGA representative action procedures, and the ability to pursue punitive damages in cases involving willful or egregious conduct. Attorney's fees are available to prevailing plaintiffs, which makes many wage cases economically viable for workers even without upfront costs. Cases in court also resolve more predictably than administrative proceedings, though they take longer to litigate through to judgment.

3. File a PAGA Notice for Representative Claims

If your wage theft was systematic, affecting coworkers on the same policies, a PAGA representative action may dramatically increase total recovery and create significant settlement pressure on the employer. PAGA requires a written notice to the Labor and Workforce Development Agency before filing suit, describing the violations and the employees affected. The 2024 reforms require the plaintiff to have personally experienced each violation alleged. PAGA penalties accumulate across every aggrieved employee for every pay period the violation persisted, and 35% of recovered penalties flow directly to workers. For more detail on PAGA, see our full PAGA guide here .

4. Report Retaliation Immediately if It Occurs

Labor Code section 98.6 prohibits employers from retaliating against employees for filing a wage claim, complaining about wage violations, or cooperating in a Labor Commissioner investigation. Termination, demotion, reduction in hours, or other adverse action following a wage complaint is independently unlawful and gives rise to additional claims. SB 497's 90-day rebuttable presumption of retaliation applies to wage complaint activity under Labor Code sections 98.6, 1102.5, and 1197.5, meaning if your employer acts against you within 90 days of your protected activity, the law presumes the action was retaliatory.

When to Hire a Wage Theft Attorney in California

The Labor Commissioner's process is designed to be accessible without legal representation, and for straightforward, smaller claims with clear documentation, administrative filing may be the right first step. But there are situations where legal counsel materially changes the outcome, and often the difference between recovering full value and walking away with a fraction of what you are owed.

Consult a wage theft attorney if any of the following apply to your situation:

The violations were systematic or affected multiple coworkers. If the same payroll policy or practice applied to everyone on your shift or in your department, PAGA or class action procedures may dramatically increase your recovery and your leverage. These cases require counsel.
Your employer is denying the violations or offering a low settlement. Administrative findings are appealed frequently. An employer with defense counsel will approach the process differently than one resolving a straightforward claim. You need representation to match.
You were also retaliated against for complaining . Retaliation claims layer on top of wage claims and involve different statutes, different remedies, and different evidentiary requirements. A combined wage-plus-retaliation claim materially increases total case value.
Your total unpaid wages exceed $5,000–$10,000. At this level, the complexity of calculating full damages, including liquidated damages, meal and rest premiums, waiting time penalties, and interest, justifies legal involvement, and attorney's fees are recoverable if you prevail.
You were misclassified as an independent contractor . Misclassification cases involve both wage recovery and penalty claims across every Labor Code protection you were denied. They are among the most complex and highest-value wage claims in California.
Your employer has gone out of business or appears unable to pay. There are legal tools, including successor liability, personal liability for owners and officers, and mechanic's liens in construction cases, that can protect your recovery even when a business has closed. These require experienced counsel to pursue effectively.
You have been asked to sign a severance or settlement agreement. A release of claims without legal review can extinguish wage rights worth far more than what was offered. Have any settlement reviewed before you sign.
California law provides attorney's fees to prevailing employees in most wage claims, which means legal representation in a strong case typically costs you nothing out of pocket. Many employment attorneys handle wage claims on contingency; they get paid when you recover.

Frequently Asked Questions About Wage Theft in California

Can my employer retaliate against me for filing a wage claim?

No. California Labor Code section 98.6 makes it unlawful for an employer to discharge, threaten, or otherwise retaliate against an employee for filing a wage claim, complaining about wage practices, or cooperating with a Labor Commissioner investigation. If your employer takes adverse action against you within 90 days of a wage-related complaint or filing, SB 497's rebuttable presumption of retaliation applies, meaning the employer must affirmatively prove the action was not retaliatory. Retaliation is an independently actionable wrong that can add reinstatement, back pay, emotional distress damages, and civil penalties of up to $10,000 per violation to your total recovery. And critically: your immigration status doesn't affect your right to file a wage claim. The Labor Commissioner will not inquire about or report your immigration status.

My employer says I'm an independent contractor, not an employee. Can I still file a wage claim?

Yes, and the Labor Commissioner will determine independently whether you were actually an employee. Under California's ABC test (the primary standard for most workers after AB 5), a worker is presumed to be an employee unless the employer can prove all three of the following: the worker is free from the control and direction of the employer; the worker performs work outside the usual course of the employer's business; and the worker is customarily engaged in an independently established trade or occupation. The ABC test is strict, and many "contractors" in California are actually employees under this standard. If you were misclassified, you can recover all wages, overtime, meal and rest break premiums, and other compensation you were denied during the entire misclassification period.

I don't have any pay stubs or time records. Can I still recover unpaid wages?

Potentially yes. California law requires employers to maintain accurate payroll and time records (Lab. Code, § 1174), and courts have held that where an employer fails to maintain required records, the burden of proof shifts, the employee's best recollection of hours worked can establish a prima facie case, and the employer then bears the burden of negating it. This principle, drawn from the U.S. Supreme Court's decision in Anderson v. Mt. Clemens Pottery Co. and applied in California courts, is particularly important in off-the-clock and tip theft cases where written documentation is rarely kept. Your estimates, corroborated by coworker testimony and any other evidence, can form the basis of a viable claim even without complete payroll records.

How long does it take to resolve a wage claim in California?

It varies widely by route. Administrative claims at the Labor Commissioner currently face severe delays, the 2024 state audit found claims taking up to six times longer than the four-month statutory target, with a backlog of approximately 47,000 unresolved claims. Simple claims with cooperative employers may resolve in a few months through a settlement conference. Contested claims requiring a hearing can take two years or more. Civil litigation typically takes 12 to 36 months depending on the complexity and the employer's litigation posture. PAGA actions with multiple aggrieved employees can add time but also meaningfully increase settlement pressure. The most reliable way to accelerate resolution, and maximize recovery, is representation by an experienced employment attorney who can evaluate the fastest and most effective path for your specific facts.

Can I recover unpaid wages from an employer who has closed or gone bankrupt?

Sometimes, it requires a different legal strategy than a standard wage claim. Options include: pursuing personal liability against owners, officers, or managers who participated in or directed the wage theft (California courts have upheld personal liability for Labor Code violations in certain circumstances); asserting successor liability against a business that acquired the assets of the former employer; pursuing mechanics liens in construction cases; filing a claim in bankruptcy proceedings as a creditor (unpaid wages are entitled to priority treatment in bankruptcy up to statutory limits); or filing with the California Labor Commissioner, which has its own collection tools including property liens, bank levies, and business license revocations. An experienced employment attorney can assess which of these avenues offers the best realistic path to recovery given your employer's specific circumstances.

Your Wages Are Protected, But Only If You Act

California gives workers a powerful arsenal of wage theft remedies, unpaid wages, liquidated damages, meal and rest break premiums, waiting time penalties, wage statement violations, PAGA civil penalties, interest, and attorney's fees. In cases involving systematic violations across a workforce, that arsenal can generate substantial aggregate recovery and put real pressure on employers to settle.

But every one of those remedies is time-limited. Statutes of limitations run from each date of violation. Evidence disappears. Witnesses move on. Employers dispute and delay. The best-positioned workers are those who document violations as they occur, consult counsel early, and file claims before the administrative and litigation timelines become constraints on their recovery.

At McLellan Law Group, LLP , our employment attorneys advise California workers on wage and hour claims, from individual unpaid overtime cases to systemic violations supporting representative PAGA actions. If you believe your employer has not paid you everything you are owed, we will evaluate your situation, identify every applicable remedy, and give you a clear picture of your options.

Think Your Employer Owes You Unpaid Wages?

California law puts multiple powerful tools in your hands, but they have deadlines. The sooner you speak with a wage theft attorney, the more options you have. Request a complimentary initial consultation with McLellan Law Group, LLP today.

Request a Complimentary Consultation

Understanding PAGA Claims in California: What Employees and Employers Need to Know

Wed, 27 May 2026 00:12:44 GMT

Understanding PAGA Claims in California: What Employees and Employers Need to Know

Claire Melehani

California's Private Attorneys General Act was dramatically overhauled in 2024, the most substantial changes to the law in its twenty-year history. If you are an employee with potential wage and hour claims, or an employer trying to manage PAGA exposure, the rules that govern your situation today are meaningfully different from what they were before June 2024.

Few California employment laws generate as much anxiety as the Private Attorneys General Act of 2004 (PAGA). And few generate as much litigation. Codified at Labor Code section 2699 et seq., PAGA claims in California allow employees to sue their employers on behalf of the State of California for Labor Code violations, collecting civil penalties that are then split between the state and affected workers. For two decades, it was one of the most powerful, and most contested, tools in California employment law.

That changed in July 2024. Governor Newsom signed Assembly Bill 2288 and Senate Bill 92, and the result was the biggest restructuring of PAGA in its twenty-year history. The reforms, the product of negotiations between labor and business groups to head off a ballot initiative that would have repealed PAGA entirely, changed standing requirements, penalty structures, cure provisions, and court management authority. They apply to all PAGA notices submitted to the Labor and Workforce Development Agency (LWDA) on or after June 19, 2024.

This guide explains what PAGA is, how claims work under the reformed law, what penalties look like today, and what both employees and employers need to know to protect their interests.

If You Are an Employee

PAGA gives you the ability to enforce California Labor Code violations on behalf of yourself and your coworkers, and collect civil penalties, even when the individual amounts are too small to justify individual litigation. The 2024 reforms tightened standing requirements but increased the share of penalties that flowed to workers.

If You Are an Employer

PAGA exposure can be staggering, penalties multiply by every aggrieved employee, every pay period, and every violation. The 2024 reforms give proactive employers meaningful tools to limit or eliminate penalties through compliance steps and cure provisions. Using those tools correctly requires understanding how the new rules work.

What Is PAGA and Why Does It Exist?

PAGA was enacted in 2004 to address a practical enforcement gap: the California Labor Commissioner lacked the resources to investigate and prosecute every employer Labor Code violation in the state. PAGA's solution was to deputize employees, as "private attorneys general", to bring enforcement actions on behalf of the state, recovering civil penalties for Labor Code violations that would otherwise go unpunished.

Under PAGA, an employee who has suffered a Labor Code violation can file a lawsuit seeking civil penalties not just for themselves, but for all "aggrieved employees", current and former workers who experienced the same violations during the relevant period. This representative structure is what makes PAGA so powerful and, historically, so difficult for employers to defend: a single plaintiff can represent hundreds of coworkers, and penalties accumulate across every aggrieved employee for every pay period the violation persisted.

PAGA covers a broad range of Labor Code violations. The most commonly litigated include meal period violations (Lab. Code, § 512), rest break violations (§ 226.7), overtime violations (§ 510), minimum wage violations (§§ 1194, 1197), wage statement deficiencies (§ 226), failure to reimburse business expenses (§ 2802), and untimely wage payments (§§ 201–204). Any Labor Code section listed in section 2699.5, a long list, is subject to PAGA penalties.

How a PAGA Claim Works: The Process from Notice to Resolution

PAGA claims follow a specific procedural path before a lawsuit can be filed. Understanding the sequence is essential for both sides.

1 Employee Files a PAGA Notice with the LWDA

Before filing suit, the employee must submit a written notice to the Labor and Workforce Development Agency and the employer describing the specific Labor Code violations alleged and the facts and theories supporting each claim. This notice starts two clocks: the LWDA has 60 days to notify the employee whether it will investigate; the employer has an opportunity to respond. The PAGA notice is critical; it defines the scope of the lawsuit. Under the 2024 reforms, the employee must have personally experienced each violation alleged within one year of filing the notice.

2 Cure Window and Early Evaluation Conference

The 2024 reforms greatly expanded the employer's opportunity to cure violations before litigation proceeds. Employers with fewer than 100 employees who take "all reasonable steps" to cure alleged violations and come into compliance, within 65 days of the PAGA notice or 33 days of the LWDA's notice, may avoid penalties entirely for cured violations. For larger employers, curing within 60 days of receiving a notice caps penalties at 30% of the statutory amount for those violations. Separately, once a complaint is filed, employers may now request an Early Evaluation Conference with a neutral evaluator, a new mechanism that can pause litigation and facilitate early resolution.

3 Lawsuit Filed in Superior Court

If the LWDA declines to investigate or the cure window closes without resolution, the employee may file a civil action in California Superior Court. The case is brought on behalf of the State of California and all aggrieved employees. Unlike a class action, PAGA claims do not require class certification, but the 2024 reforms give courts explicit authority to limit the scope of PAGA claims for manageability, including restricting evidence and narrowing the issues to be tried.

4 Discovery and Litigation

PAGA litigation involves extensive discovery into payroll records, time records, wage statements, employment policies, and the employer's response to prior notices or audits. The new standing requirement, that the plaintiff personally experienced each violation alleged, means defendants can now challenge overly broad PAGA claims earlier and more effectively. Courts can also manage claims by limiting representative evidence and narrowing the scope of trial.

5 Settlement or Judgment, With Court Approval Required

Because PAGA claims involve penalties owed to the state, any settlement must be submitted to the court for approval and the LWDA must receive notice. The court reviews whether the settlement is fair and reasonable. Penalties recovered are distributed 65% to the LWDA and 35% to aggrieved employees under the 2024 reform (previously 75%/25%). Individual employee shares depend on the total recovery and the number of aggrieved employees.

The 2024 PAGA Reforms: What Changed

AB 2288 & SB 92, Effective June 19, 2024 | Signed July 1, 2024

Assembly Bill 2288 and Senate Bill 92 made the most significant changes to PAGA in its twenty-year history. Here is a structured summary of the key reforms and what they mean in practice.

Standing, Personal Experience Required

Plaintiffs must now personally have experienced each Labor Code violation they seek to pursue on a representative basis, and that experience must fall within the one-year statute of limitations. Prior case law allowed plaintiffs to pursue violations they never suffered personally, as long as they suffered at least one violation. That rule is gone for post-June 2024 claims.

Penalty Caps for Compliant Employers

Employers who take "all reasonable steps" to comply before receiving a PAGA notice face penalties capped at 15% of the statutory amount. Employers who take those steps within 60 days of the notice face a 30% cap. Employers who both take reasonable steps and cure the violation owe no penalties for the cured violations. "Reasonable steps" include payroll audits, written policies, and supervisory training.

Expanded Cure Provisions

The list of curable violations now includes meal and rest break premium pay violations (§ 226.7), overtime (§ 510), expense reimbursement (§ 2802), and wage statements (§ 226), categories previously excluded from the cure process. SB 92 also created a new early resolution procedure for smaller employers and added LWDA authority to dismiss cured wage statement claims.

$200 Penalty Narrowly Defined

The higher $200 per-employee per-pay-period penalty now requires either (1) a court or agency finding within the prior five years that the employer's specific policy was unlawful, or (2) a judicial determination that the employer's conduct was malicious, fraudulent, or oppressive, the same standard as punitive damages. This makes the $200 tier meaningfully harder to reach.

$50 Penalty for Isolated, Non-Recurring Violations

When an employer demonstrates a violation was isolated and non-recurring, the applicable penalty is reduced to $50 per aggrieved employee per pay period, a significant reduction from the baseline $100 rate for employers who can show the violation was not systematic.

Weekly Pay Period Reduction

Penalties are reduced by 50% when the employer pays employees on a weekly rather than biweekly or semimonthly basis. This corrects a longstanding inequity where employers who paid more frequently faced proportionally higher PAGA exposure purely because of pay period frequency.

Injunctive Relief Added

For the first time, PAGA plaintiffs can seek injunctive relief to compel employers to implement workplace changes. Previously, civil penalties and attorney's fees were the only available remedies. Injunctive relief is now available in any circumstance where the LWDA could seek it.

Employee Share Increased: 35%

The employee share of recovered PAGA penalties increased from 25% to 35%. The LWDA's share correspondingly decreased from 75% to 65%. This increases the direct financial return to aggrieved workers from successful PAGA claims or settlements.

How PAGA Penalties Are Calculated in 2026

PAGA penalties accumulate quickly because they multiply across every aggrieved employee and every pay period. Even a mid-sized employer with a widespread meal break violation can face seven-figure exposure within a one-year lookback period. The following table reflects the current penalty structure under the 2024 reforms for PAGA notices filed on or after June 19, 2024.

Illustrative exposure calculation: An employer with 80 employees, biweekly pay periods, and a systemic meal break violation over a one-year lookback period (26 pay periods) faces baseline PAGA exposure of: 80 employees × 26 pay periods × $100 = $208,000. At the 15% cap (for an employer with documented proactive compliance), that drops to approximately $31,200. Of any recovery, 35% flows to employees and 65% to the LWDA. The math illustrates both the scale of PAGA exposure and the value of the compliance-based penalty caps the 2024 reforms created.

Note: PAGA recovers civil penalties, not actual unpaid wages. Employees seeking recovery of unpaid wages must bring individual claims alongside or separately from the PAGA action.

Strategic Considerations for Employees and Employers

For Employees and Their Counsel

The 2024 reforms did not eliminate PAGA, they made it more targeted. Employees with genuine, personally experienced Labor Code violations remain well-positioned to bring PAGA claims, particularly where the violations are systemic, the employer has no documented compliance program, and the workforce is large enough to generate meaningful aggregate penalties.

The increased employee share, now 35%, means successful PAGA actions deliver more directly to workers than they did before 2024. And the addition of injunctive relief gives plaintiffs a new tool to force workplace changes that benefit current employees beyond any monetary recovery.

Key strategic considerations for employees include: ensuring the PAGA notice is detailed and specifically describes the violations personally experienced; filing within one year of the violations; understanding that individual wage claims for actual unpaid compensation must be pursued separately from PAGA penalty claims; and recognizing that PAGA settlements require court approval, which adds a layer of scrutiny that protects workers from inadequate settlements.

For Employers

The 2024 reforms gave California employers the most meaningful PAGA defense tools in the law's history. The compliance-based penalty caps, 15% for employers who document proactive compliance before a notice, 30% for those who act quickly after, can reduce seven-figure exposure to five figures. The expanded cure provisions allow employers to eliminate penalties entirely for violations they correct completely and promptly.

But those tools only work if employers have done the work in advance. An employer who receives a PAGA notice and has no payroll audit history, no written wage and hour policies, and no supervisory training record cannot credibly claim the 15% cap. The time to build that compliance record is before the notice arrives, not after.

Employers should also take the Early Evaluation Conference mechanism seriously. Requesting a stay of proceedings and presenting a cure plan to a neutral evaluator can short-circuit expensive litigation in meritorious cases. And the new standing rules, requiring plaintiffs to personally have experienced each violation, give defense counsel meaningful grounds to challenge the scope of PAGA claims at the pleading stage.

Frequently Asked Questions About PAGA in California

Can my employer force me to arbitrate a PAGA claim?

Generally no, and this is one of PAGA's most significant features. The California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC (2014) held that pre-dispute waivers of representative PAGA claims are unenforceable as contrary to public policy. The U.S. Supreme Court's decision in Viking River Cruises v. Moriana (2022) muddied the waters, but the California Supreme Court subsequently clarified in Adolph v. Uber Technologies, Inc. (2023) that employees retain standing to pursue representative PAGA claims in court even where an individual PAGA claim is compelled to arbitration. In practice, employers cannot use arbitration agreements to eliminate PAGA representative actions, though the interaction between arbitration and PAGA standing continues to be litigated.

How long do I have to file a PAGA claim?

Under the 2024 reforms, a PAGA plaintiff must have personally experienced the alleged Labor Code violations within one year of filing the PAGA notice with the LWDA. This tightened the statute of limitations compared to prior case law that had been interpreted to allow broader lookback periods. The one-year clock runs from the date of the violation the plaintiff personally experienced, not from the date the plaintiff learned of it. Once a timely PAGA notice is filed, the action in court covers violations during the one-year lookback period for the violations the plaintiff actually experienced.

Does a PAGA settlement pay me my unpaid wages?

Not directly. PAGA recovers civil penalties, which are distinct from the actual wages owed to you. Of any PAGA recovery, you receive 35% of the penalties allocated to aggrieved employees, but that is a share of a penalty, not the full amount of unpaid wages you may be owed. To recover unpaid wages themselves, you need to bring individual wage claims, either as part of the same lawsuit or through a separate action before the Labor Commissioner. An experienced employment attorney will typically pursue both PAGA penalties and individual wage recovery concurrently to maximize your total recovery.

What kinds of violations are most commonly pursued under PAGA?

The most frequently litigated PAGA claims involve meal period violations (missed, late, or short meal breaks), rest break violations, overtime miscalculation, minimum wage violations, deficient wage statements under Labor Code section 226, failure to reimburse business expenses under section 2802, and failure to timely pay wages upon termination. In California's tech and gig economy sectors, misclassification of workers as independent contractors, and the resulting cascade of Labor Code violations, is also a significant driver of PAGA claims. The violations that generate the largest PAGA exposure are those that are systemic rather than isolated: a uniform payroll policy that shortchanges thousands of employees on meal periods, for example, can generate staggering aggregate penalties even where the per-employee loss is modest.

As an employer, what is the most important thing I can do to reduce PAGA risk?

Document your compliance proactively, before any PAGA notice arrives. Under the 2024 reforms, the difference between paying 100% of statutory penalties and paying 15% turns entirely on whether you can demonstrate "all reasonable steps" taken prior to receiving a PAGA notice. That means conducting and documenting regular payroll audits, maintaining written wage and hour policies, training supervisors on Labor Code compliance, and acting on the results of audits when violations are identified. An employer who receives a PAGA notice with no compliance history cannot retroactively create that record. Build it now, and consult employment counsel to ensure your program meets the standard the reformed statute contemplates.

Do the 2024 PAGA reforms apply to my case?

It depends on when the PAGA notice was filed with the LWDA. The 2024 reforms, including the new standing requirements, penalty caps, expanded cure provisions, and other changes, apply to any PAGA notice submitted to the LWDA on or after June 19, 2024. Claims where the PAGA notice was filed before that date are governed by the prior version of the statute. If you received or filed a PAGA notice after June 19, 2024, the reformed rules apply. If your notice predates that cutoff, the analysis is different. An attorney can quickly confirm which version of PAGA controls your situation.

Working with a PAGA Lawyer in California

PAGA litigation, whether you are an employee seeking to hold an employer accountable for systemic wage violations, or an employer navigating a PAGA notice and trying to minimize exposure, requires counsel who understands both the technical mechanics of the statute and the practical dynamics of how these cases resolve.

The 2024 reforms created significant new opportunities for employers to reduce or eliminate PAGA liability through documented compliance and timely cure. They also created important new protections for employees, including injunctive relief and an increased share of recovered penalties, that make well-supported PAGA claims more valuable than before. Navigating that landscape effectively requires understanding exactly which version of the law applies, what the employer's compliance record looks like, and how the penalty structure interacts with the specific violations alleged.

At McLellan Law Group, LLP , our employment attorneys advise both employees and employers on California wage and hour compliance, PAGA notices, and PAGA litigation. Whether you have received a notice, are evaluating a potential claim, or need to build a compliance program that reduces your exposure, we can help you understand your position under the current law and chart the most strategic path forward.

Questions About a PAGA Notice or Potential Claim?

PAGA exposure, and PAGA rights, are both time-sensitive. Whether you are an employee who has experienced wage and hour violations or an employer who has received a PAGA notice, early legal guidance is the most effective way to protect your position. Contact McLellan Law Group, LLP for a complimentary initial consultation.

Request a Complimentary Consultation

Average Wrongful Termination Settlements in California: What You Need to Know in 2026

Mon, 18 May 2026 12:00:09 GMT

Average Wrongful Termination Settlements in California: What You Need to Know in 2026

Claire Melehani

There is no single "average" wrongful termination settlement in California, and any article that quotes you one number without knowing your facts is misleading you. What does exist is a clear framework of factors that determine how much your case is actually worth. This guide walks through that framework honestly, so you can evaluate your situation with realistic expectations.

If you were wrongfully terminated in California, the first question most people ask is: what is the average wrongful termination settlement in California? It is a fair question, and you deserve a straight answer, even when the honest answer is "it depends on your facts.".

California provides some of the strongest wrongful termination protections in the country. The damages available are correspondingly broad, back pay, front pay, emotional distress, punitive damages, attorney's fees, and now additional statutory penalties under laws updated as recently as 2024 and 2026. But the specific value of any case depends heavily on facts: your salary, how long you were unemployed, the strength of your evidence, the type of legal theory, and how egregiously your employer behaved.

Below, we break down what the data shows about California settlement ranges, the specific factors that move case value up or down, how different legal theories affect potential recovery, and what 2026's new laws mean for employees pursuing claims today.

What California Wrongful Termination Settlements Actually Look Like

California wrongful termination settlements cover a huge range. Cases resolve for as little as a few thousand dollars when the legal theory is weak or the employee's economic losses are minimal. They resolve for tens of millions of dollars in high-profile cases involving punitive damages or systemic discrimination. Between those extremes, the realistic range for most represented California employees falls somewhere in the following tiers.

For context: the California Civil Rights Department has reported securing approximately $116.5 million through 788 civil rights settlements over a recent reporting period, an average of roughly $147,843 per settlement across all case types, including employment discrimination claims. National survey data consistently shows that employees represented by attorneys receive markedly higher settlements than those who navigate the process alone, roughly $48,800 with representation versus $19,200 without, by one widely cited national estimate. The gap is likely even larger in California, where the legal landscape is more complex and the stakes are higher.

What "average" really means here: Averages are pulled up dramatically by large verdicts and multi-claimant settlements. For most individual wrongful termination cases, the realistic expectation is driven by your specific economic damages, primarily your salary and how long it takes you to find comparable work, plus the nature and strength of your legal claims. The frameworks below are more useful than any single average figure.

The 8 Factors That Determine What Your Case Is Worth

Experienced California employment attorneys evaluate wrongful termination cases by working through a defined set of factors. Each one can materially increase or decrease the value of your claim. Understanding them helps you have a more informed conversation with your attorney, and set realistic expectations before entering negotiations.

1. Your Pre-Termination Salary and Benefits

Back pay, the wages, benefits, bonuses, equity, and other compensation you lost from the date of termination through settlement or judgment, is the foundation of most claims. A higher-earning employee with the same legal theory recovers more than a lower-earning one, because the economic loss is larger. Executive-level compensation structures, including unvested equity and deferred bonuses that were cut off by the termination, can dramatically increase case value.

2. How Long You Remained Unemployed

Back pay accrues from termination until you find comparable employment, or until judgment. The longer the gap, the larger the back pay figure. California law requires you to make reasonable efforts to find comparable work (the duty to mitigate), and your employer will argue your mitigation efforts were inadequate. Document every job search step. Failing to mitigate can sharply reduce your recovery, while a demonstrated inability to find comparable work, particularly common for older or specialized workers, increases it.

3. The Type and Strength of Your Legal Claim

Not all wrongful termination theories are equal. FEHA discrimination and retaliation claims, whistleblower retaliation under Labor Code section 1102.5, and Tameny public policy claims each carry different remedies, different burdens of proof, and different litigation risk for the employer. Claims with strong statutory backing, clear causal evidence, and punitive damages exposure command higher settlements. Weak or ambiguous theories, where the employer has a plausible legitimate reason, compress value.

4. The Strength and Specificity of Your Evidence

Documentary evidence, emails, text messages, performance reviews that were positive before your complaint, write-ups that appeared only after your protected activity, recorded statements, gives your claims credibility and makes early resolution more likely at higher values. Cases built primarily on "he said, she said" testimony are harder to settle at full value because both sides face trial risk. The more your evidence tells a clear, documented story, the more leverage you have in negotiation.

5. Emotional Distress and Non-Economic Harm

FEHA claims, Tameny tort claims, and harassment-related wrongful termination cases allow recovery of emotional distress damages, compensation for anxiety, depression, humiliation, loss of professional identity, and related psychological harm. These damages are uncapped under California law and can materially increase total recovery, particularly in cases involving prolonged harassment prior to termination or termination in especially humiliating circumstances. Medical documentation of mental health treatment strengthens this component considerably.

6. Punitive Damages Exposure

Punitive damages under Civil Code section 3294 are available in Tameny and FEHA claims where the employer's conduct was malicious, oppressive, or fraudulent. They are not available in breach-of-contract claims. Punitive damages create enormous settlement pressure when they are genuinely in play. That usually means documented egregious conduct, a cover-up, or direct involvement by a decision-maker in the retaliatory action. They often drive the largest pre-trial settlements. Punitive damages are only awarded by a jury at trial, but their threat at the negotiating table is real.

7. The Size and Resources of Your Employer

Large, financially sophisticated employers with professional legal teams tend to defend longer and harder, but they also carry higher reputational risk and face larger punitive damages exposure. Publicly traded companies and well-known brands have additional incentive to settle quietly. Smaller employers may lack the financial ability to pay large judgments even if you win, which affects both settlement value and collectability. Your attorney will assess the employer's ability to pay as part of case strategy.

8. Attorney Fees Exposure

FEHA gives prevailing employees the right to recover attorney's fees from the employer. This is a powerful lever in settlement negotiations. An employer facing a strong FEHA case knows it may owe not just your damages but also your lawyer's fees, which in complex employment litigation can run $200,000 or more. This fee-shifting exposure meaningfully increases settlement values in FEHA cases and creates strong incentive for employers to resolve before trial.

Settlement Ranges by Type of Wrongful Termination Claim

The legal theory underlying your wrongful termination shapes which damages are available, how difficult the claim is to prove, and how aggressively an employer is likely to defend. Here is how the most common California wrongful termination theories typically play out in settlement.

Mid to High Range

Discrimination-Based Wrongful Termination (FEHA)

Terminations motivated by race, sex, age, disability, national origin, religion, sexual orientation, pregnancy, or other FEHA-protected characteristics support discrimination claims under Government Code section 12940. These claims allow back pay, front pay, emotional distress, punitive damages, and attorney's fees. Age discrimination cases involving employees over 40 often carry particularly high emotional distress components. Cases with documented comparator evidence, similarly situated employees outside the protected class who were not terminated, settle in the higher ranges.

High Range

Retaliation for Reporting Harassment or Whistleblowing (FEHA / Lab. Code § 1102.5)

Retaliation claims, including terminations following harassment complaints, safety complaints, or reports of legal violations, are among the highest-value wrongful termination cases. SB 497 (effective January 1, 2024) added a rebuttable presumption of retaliation when adverse action occurs within 90 days of protected activity, plus civil penalties of up to $10,000 per violation paid directly to the employee. Labor Code section 1102.5 whistleblower claims carry a three-year statute of limitations and allow full compensatory and punitive damages. The combination of the presumption, enhanced penalties, and punitive damages exposure makes these cases particularly compelling in settlement.

High Range

Wrongful Termination in Violation of Public Policy (Tameny Claims)

A Tameny claim arises when an employee is fired for exercising a statutory right, filing a workers' compensation claim, serving on jury duty, refusing to participate in illegal activity, or other conduct protected by public policy. These are tort claims, not contract claims, which means they support emotional distress damages and punitive damages under Civil Code section 3294. The two-year statute of limitations is shorter than FEHA's three years, making timely legal consultation critical. When layered on top of FEHA or Labor Code claims arising from the same termination, Tameny claims dramatically increase total case value and settlement leverage.

Mid Range

Constructive Discharge

Constructive discharge, where working conditions were made so intolerable that a reasonable person would feel compelled to resign, is treated as a termination under California law. These cases are more difficult to prove than direct terminations because the employer can argue the employee voluntarily quit. But where the intolerable conditions were themselves discriminatory, retaliatory, or harassing, the constructive discharge theory layers on top of underlying FEHA or Tameny claims and recovers the same damages. The challenge is documenting the conditions that made continued employment impossible.

Highest Range / Trial Only

Cases Involving Punitive Damages and Systemic Conduct

Cases where senior management personally participated in discrimination or retaliation, where HR actively covered up wrongdoing, or where the employer maintained a documented pattern of illegal conduct across multiple employees present the most significant punitive damages exposure. California juries have returned verdicts of $6 million, $34.7 million, $52 million, and beyond in egregious cases. These cases rarely settle without substantial pre-trial litigation, but the trial risk for an employer facing strong evidence of malicious or systemic conduct creates enormous settlement pressure.

What's New in 2026 That Could Affect Your Case Value

Several California developments effective January 1, 2026 are directly relevant to wrongful termination claims and the damages available to California employees:

AB 250, Sexual Assault Claim Revival : A two-year revival window (through December 31, 2027) opens previously time-barred sexual assault civil claims against private employers where a cover-up is alleged. Related claims, including wrongful termination and sexual harassment arising from the same conduct, are also revived. If you were terminated after reporting a sexual assault and believed your claims were expired, this window may apply to you.
SB 477, FEHA Enforcement Enhancements: FEHA's enforcement procedures have been updated, including formal recognition of group or class complaints alleging patterns or practices of discrimination. This development strengthens systemic claims and may increase settlement pressure in cases where the employer's conduct extended beyond a single employee.
SB 261, Enhanced Judgment Enforcement: Courts may now impose civil penalties of up to three times an unpaid wage judgment if it remains unsatisfied 180 days after the appeal period, with successor employer liability. This meaningfully increases the cost of a California employer's failure to pay a wrongful termination judgment, improving collectability of judgments.
AB 692, Training Repayment Agreement Prohibition: Agreements requiring employees to repay training costs, onboarding expenses, or similar amounts upon termination are now void as a matter of public policy for contracts entered after January 1, 2026. If your former employer has or attempts to enforce such a clawback against you, it may be unlawful, and the violation carries its own private right of action with damages of $5,000 per employee.
SB 497 (Effective January 1, 2024): The 90-day rebuttable presumption of retaliation remains fully in effect. Any adverse action within 90 days of protected activity now presumptively constitutes retaliation, with up to $10,000 in civil penalties per violation payable directly to the employee, in addition to all other damages.

Factors That Can Reduce Your Settlement Value

Just as certain facts strengthen a case, others compress its value. California employers and their defense counsel will aggressively surface these during negotiations. Knowing them in advance helps you and your attorney prepare counterarguments.

Legitimate performance issue history. If your employer has documented performance problems predating your protected activity, written warnings, poor reviews, attendance issues, they will argue the termination was performance-based, not retaliatory. The stronger and more consistent that record, the harder it is to prove causation, even with suspicious timing.
Failure to mitigate damages. If you did not make reasonable, documented efforts to find comparable employment after being terminated, your employer can ask the court to reduce your back pay award. Gaps in job search activity, turning down comparable offers, or a significant delay in beginning your search all hurt this component.
Gaps in documentation. A retaliation claim built primarily on the employee's recollection, without supporting emails, texts, witness statements, or contemporaneous records, is far harder to settle at full value. Employers fight harder when they believe the evidence is thin.
At-will employment and documented legitimate reasons. California's at-will employment rule (Lab. Code, § 2922) means employers can terminate for any lawful reason. An employer who can present a credible, documented, non-retaliatory reason for the termination, even if you believe the real reason was illegal, shifts the burden back to you and reduces settlement pressure.
Short employment tenure. Claims involving employees terminated after a few months of employment typically involve smaller back pay figures, less developed relationships giving rise to emotional distress claims, and weaker arguments about lost career opportunity. Tenure is not dispositive, but it affects economic damages directly.
Missed administrative deadlines. A potentially strong case can be partially or entirely barred by a missed CRD filing deadline, an untimely government claims act filing (for public employees), or an expired statute of limitations. Procedural missteps early in the process can eliminate valuable claims before the merits are ever reached.

When to Hire a Lawyer, and Why Timing Matters

The decision to retain an employment attorney is not just about whether you have a viable claim. It is about protecting the full value of the claim you have.

The data is clear: represented employees recover considerably more in wrongful termination cases than unrepresented ones. The gap exists because experienced employment counsel knows how to identify every applicable legal theory, calculate the full measure of economic and non-economic damages, navigate the administrative prerequisites for FEHA claims without triggering procedural bars, negotiate from a position of credible litigation threat, and recognize when a severance offer falls materially short of case value.

Beyond outcomes, timing matters independently. The administrative prerequisites for FEHA claims require a CRD complaint before you can file in court. Multiple statutes of limitations run simultaneously from the date of termination. Evidence, emails, witness availability, electronically stored information subject to document retention policies, disappears. And a severance agreement signed without legal review may extinguish claims worth multiples of the severance offered.

When should you contact an attorney? As soon as you have reason to believe your termination was unlawful, and before you sign any severance agreement. Most employment attorneys offer an initial consultation to evaluate your facts. There is no downside to getting that assessment before you make irreversible decisions about your claims.

Frequently Asked Questions

How long do wrongful termination cases take to settle in California?

Most California wrongful termination cases that settle do so between 6 and 24 months after the claim is initiated, though this varies widely based on the complexity of the case, the employer's litigation posture, and how far into discovery the parties proceed. Cases that settle early (before a lawsuit is filed) typically settle for less than cases that proceed through formal litigation, because the employer has had less exposure to the strength of the evidence. Cases that go to trial can take three years or more to resolve. Many cases also proceed to mediation after written discovery, which frequently produces settlement in the middle range of the litigation timeline.

Is a wrongful termination settlement taxable in California?

Generally, yes, with important nuances. Back pay and front pay are taxed as ordinary income, the same as wages. Emotional distress damages are typically taxable as ordinary income unless they are directly attributable to a physical injury or sickness. Punitive damages are fully taxable as ordinary income. Attorney's fees paid from your settlement may also create taxable income to you even though you do not receive that portion directly. Settlement agreement structure, including how the payment is characterized, can affect the tax treatment, which is one reason to have both an employment attorney and a tax professional review the terms before you sign. This is not tax advice; consult a qualified tax professional about your specific situation.

Can I negotiate my own wrongful termination settlement without a lawyer?

Technically yes, but the data strongly suggests you should not, or at least not without understanding what you are giving up. Employees without legal representation consistently settle for a fraction of what represented employees recover. Employers know when they are negotiating against an unrepresented claimant, and their opening offers reflect that. Beyond negotiation leverage, the procedural requirements for FEHA claims, the complexity of identifying all applicable legal theories, and the risk of inadvertently waiving claims in a poorly drafted release all create significant hazards for employees negotiating without counsel. A consultation with an employment attorney before negotiating directly costs you little and tells you a lot.

What if my employer laid me off as part of a mass layoff, can I still have a wrongful termination claim?

Yes. A layoff framed as a reduction in force doesn't automatically insulate an employer from wrongful termination liability. Claims frequently arise where an employee is selected for layoff because of a protected characteristic (age, disability, pregnancy, recent harassment complaint) while similarly situated employees outside the protected group were retained. The analysis examines who was selected and who was not, what criteria governed the selection, whether the selection criteria were applied consistently, and whether the timing correlates with protected activity. In 2026, this is particularly relevant given the ongoing wave of tech-sector layoffs affecting California employees. If you were included in a layoff and believe your selection was discriminatory or retaliatory, the fact that others were also laid off doesn't end the analysis.

My employer offered me a severance package. Should I sign it?

Not without legal review. Virtually every severance agreement includes a broad release of claims, including your wrongful termination claims. Once signed, that release is typically enforceable and you cannot un-sign it. The key question is whether the severance offered reflects the actual value of the claims you are releasing. In many cases it doesn't, employers make initial severance offers based on what they think you will accept, not what your claims are worth. A wrongful termination attorney can evaluate whether the offer is reasonable given your facts, negotiate for a higher figure, and ensure the release language doesn't extend beyond the claims it should cover. If you are over 40, federal law (OWBPA) gives you at least 21 days to review and 7 days to revoke. Use that time.

Does the 2026 layoff wave in California's tech sector affect wrongful termination claims?

It is directly relevant. The 2025–2026 tech layoff wave affecting companies including Oracle, Meta, Amazon, and Google has generated a significant volume of potential wrongful termination and retaliation claims. Several specific patterns are emerging: age discrimination claims where AI-driven restructurings disproportionately target older workers; retaliation claims where employees who previously raised discrimination or pay equity complaints were selected for layoff; and Cal-WARN Act violations where required notice obligations were not met. Employees affected by these layoffs, particularly those who had engaged in any protected activity in the 12 months prior to selection, should have their circumstances evaluated by employment counsel. The mass-layoff context doesn't reduce your legal protections; it just makes the analysis more fact-intensive.

The Bottom Line: Case Value Comes from Facts, Not Averages

If you are reading this article because you were recently terminated and you believe the termination was unlawful, the most useful thing this guide can tell you is that the number that matters is not the average; it is what your specific case is worth based on your salary, your evidence, your legal theories, and the conduct of your employer.

California gives terminated employees powerful tools: FEHA's broad anti-discrimination framework, the SB 497 rebuttable presumption, whistleblower protections under Labor Code section 1102.5, the Tameny public policy tort, mandatory attorney's fees for prevailing FEHA plaintiffs, and now the 2026 legislative updates that strengthen enforcement and increase employer exposure. The combination creates real leverage for employees with strong facts.

But leverage only exists if it is asserted, through the right legal theories, through the right administrative channels, before the clocks run. That is where experienced representation makes the difference.

At McLellan Law Group, LLP , our employment attorneys work with California employees across industries who have been unlawfully terminated. We will evaluate your facts, identify every applicable legal theory, and give you an honest assessment of your case's value and litigation path, so you can make an informed decision about how to proceed.

Find Out What Your Case Is Actually Worth

No article can tell you what your wrongful termination case is worth, only an attorney who knows your facts can do that. Request a complimentary initial consultation with McLellan Law Group, LLP, and get a real assessment of your situation.

Request a Complimentary Consultation

What to Do If You're Fired for Reporting Harassment in California

Mon, 11 May 2026 13:55:02 GMT

What to Do If You're Fired for Reporting Harassment in California

Claire Melehani

Reporting harassment at work takes courage. California law is supposed to protect you from doing it. If your employer fired you anyway, you likely have legal claims, and a powerful new presumption in your favor if the termination happened within 90 days of your complaint.

Every year, California employees face a painful dilemma: report harassment and risk losing their job, or stay silent and keep working in a hostile environment. State and federal law promise protection from retaliation. But some employers retaliate anyway, demoting, sidelining, or outright terminating employees within days or weeks of a harassment complaint.

If you were fired for reporting harassment in California, you are not without options. California law provides multiple overlapping protections against retaliation for reporting harassment, including a significant 2024 development, the SB 497 rebuttable presumption, that fundamentally shifts the burden of proof in your favor when your employer acts against you within 90 days of your complaint. Here is what you need to know about your rights, your options, and the steps that actually protect your claim.

What Counts as Protected Activity, and What Counts as Retaliation

Before mapping your legal options, it helps to understand two terms that will anchor any claim you bring.

Protected activity

California law protects employees who report harassment based on a protected characteristic, including sex, gender, sexual orientation, race, religion, age, disability, national origin, and other categories covered by the Fair Employment and Housing Act (FEHA), Gov. Code, § 12940 et seq. Protected activity includes:

Reporting workplace sexual harassment to HR, a supervisor, or management
Filing a formal complaint with the California Civil Rights Department (CRD)
Filing an Equal Employment Opportunity Commission (EEOC) charge
Cooperating with or participating in an internal harassment investigation
Opposing any practice you reasonably believe violates FEHA, even if you turn out to be wrong about the legal conclusion
Assisting a coworker in making a harassment complaint
Reporting harassment to law enforcement

Retaliation

Retaliation is any materially adverse action your employer takes against you because of your protected activity. Termination is the most obvious form, but retaliation also includes:

Demotion or reduction in job duties
Pay cuts or elimination of bonuses
Negative performance reviews that appear after your complaint
Reassignment to less desirable shifts, locations, or projects
Exclusion from meetings, communications, or opportunities
Increased scrutiny or disciplinary write-ups that did not occur before your complaint
Constructive discharge, making working conditions so intolerable that a reasonable person would feel compelled to resign

Important: Retaliation doesn't have to be immediate or dramatic. Some employers ramp up pressure gradually after a complaint. Employment lawyers call this pattern "death by a thousand cuts," and courts recognize it. Document every negative change in how you are treated after you report, not just the most obvious ones.

The SB 497 Rebuttable Presumption, California's Most Powerful Employee Protection

Effective January 1, 2024, California's Equal Pay and Anti-Retaliation Protection Act (SB 497) amended Labor Code sections 98.6, 1102.5, and 1197.5 to create a rebuttable presumption of retaliation when an employer takes adverse action against an employee within 90 days of protected activity.

The statutory language is direct:

"If an employer engages in any action prohibited by this section within 90 days of the protected activity specified in this section, there shall be a rebuttable presumption in favor of the employee's claim."

CA Lab. Code, § 1102.5 (as amended by SB 497, eff. Jan. 1, 2024)

What this means in practice: Before SB 497, you had to prove three things to establish a prima facie retaliation case: (1) protected activity, (2) an adverse action, and (3) a causal connection between the two. That third element, causation, was often the hardest to prove. SB 497 eliminates it automatically within the 90-day window.

If you were fired within 90 days of reporting harassment, the law presumes your employer retaliated. Your employer must then come forward with clear, legitimate, non-retaliatory reasons for the termination. If they cannot, you prevail.

The presumption applies to retaliation under Labor Code §§ 98.6, 1102.5, and 1197.5
It is a rebuttable presumption, meaning the employer can overcome it with strong evidence of a legitimate reason, but that burden now falls on them, not you
SB 497 also adds civil penalties of up to $10,000 per violation, paid directly to the employee
The 90-day window runs from when the employer knew of the protected activity, not necessarily from when you first reported

Step-by-Step: What to Do After You're Fired for Reporting Harassment

Step 1: Document Everything, Immediately

Start building a written record right now. Memory gets fuzzy. Evidence disappears faster than you think. Do the following as soon as possible:

Write a detailed timeline of every harassment incident you observed or experienced, every complaint you made (dates, methods, to whom), and every negative action your employer took after your complaint.
Preserve all records. Before you lose access to work accounts, save or screenshot emails, text messages, Slack messages, performance reviews, written warnings, and any communications referencing your complaint or your termination. Do not delete anything.
Request your personnel file. Under California Labor Code section 1198.5, you have the right to inspect your employment records within 30 days of a written request. Exercise this right. What the file says, and doesn't say, about your performance history is evidence.
Write down witness information. Note the names of coworkers who witnessed the harassment, your complaint, or your employer's reaction to it. You do not need to contact them now, but you need their names before your case is filed.
Note the 90-day window. Record the exact date you made your harassment complaint and the exact date you were fired or suffered any adverse action. That gap is the center of your SB 497 claim.

Step 2: Do Not Sign Anything Without Consulting an Attorney

Employers routinely present terminated employees with severance agreements immediately after termination. These agreements almost always include a release of claims, meaning you waive your right to sue in exchange for a severance payment. If you sign without legal review, you may permanently forfeit your retaliation claims.

California and federal law give employees time to review severance agreements before signing. Under the federal Older Workers Benefit Protection Act (OWBPA), employees age 40 or older who are asked to waive ADEA claims must receive at least 21 days to review the agreement and 7 days to revoke it after signing. Do not let an employer pressure you into signing the same-day.

A severance offer doesn't mean you must take it, and it doesn't mean your legal claims are weak. Often, the opposite is true, a quick severance offer shortly after a harassment complaint can itself be evidence of retaliatory motive. Have an attorney evaluate what your claims are actually worth before you sign anything.

Step 3: Consult an Employment Attorney Before Filing Anything

California retaliation claims can be filed through multiple channels, the Civil Rights Department (CRD), the Labor Commissioner, or directly in Superior Court in some cases, and the channel you choose affects your strategy, your remedies, and your deadlines. A misstep here can limit your recovery or bar claims entirely.

An experienced employment attorney will help you identify every viable legal theory under the facts of your case. Depending on the circumstances, your claims may include:

FEHA retaliation (Gov. Code, § 12940(h))
Whistleblower retaliation under Labor Code section 1102.5
SB 497 retaliation (Lab. Code, §§ 98.6, 1102.5, 1197.5)
Wrongful termination in violation of public policy (Tameny claim)
Harassment and/or hostile work environment under FEHA
Constructive discharge
Breach of implied employment contract (if applicable)

Each theory has its own statute of limitations, filing prerequisites, and remedies. Getting the right combination of claims in front of the right tribunal, from day one, materially affects how much leverage you have.

Step 4: File a Complaint with the California Civil Rights Department (CRD)

If you are pursuing a FEHA retaliation claim, you must file an administrative complaint with the California Civil Rights Department before you can file a lawsuit in court. This is a mandatory prerequisite. You have three years from the date of the retaliatory action to file with the CRD.

Once you file, you can either request an immediate right-to-sue notice (allowing you to proceed directly to court) or allow the CRD to investigate. After the CRD issues a right-to-sue notice, you have one year to file a lawsuit in California Superior Court.

For Labor Code retaliation claims (including SB 497 claims under sections 98.6, 1102.5, and 1197.5), the statute of limitations is generally three years from the date of the retaliatory act. These claims do not require CRD exhaustion in all instances, but the precise filing path depends on your facts and counsel's strategy. For wage and hour retaliation penalties specifically, a one-year deadline may apply for certain Labor Commissioner claims, another reason to get legal advice before any clock runs.

Do not wait. Even though California's deadlines are relatively generous compared to federal law, every day you delay is a day of evidence that could disappear, emails get deleted, witnesses move on, and document retention policies run out. Acting quickly is your best protection.

Step 5: Mitigate Your Damages, But Keep Records of Your Efforts

California law requires plaintiffs in wrongful termination cases to mitigate their damages, meaning you must make reasonable efforts to find comparable employment after your termination. Failing to do so can reduce your back pay recovery.

Keep a written log of every job application, interview, rejection, and offer you receive. This documentation serves two purposes: it demonstrates your good-faith efforts to mitigate, and it creates a record of economic harm if comparable work is unavailable or takes a long time to find.

You do not have to take a job that is way below your prior role and pay level. You are required to take comparable work, not any work. Your attorney can advise you on what that standard looks like given your specific role, industry, and compensation level.

What You Can Recover in a California Retaliation Case

California law provides robust remedies for employees who prevail on retaliation claims. Depending on the specific claims and theories you pursue, you may be entitled to:

Back Pay: Lost wages and benefits from the date of termination to the date of judgment or settlement, less amounts actually earned in mitigation.
Front Pay: Prospective lost earnings when reinstatement is not practical or appropriate.
Reinstatement: Return to your former position, if you want it and the court finds it appropriate.
Emotional Distress Damages: Compensation for the anxiety, humiliation, and psychological harm caused by the retaliation.
Punitive Damages: Available under FEHA and Tameny claims where the employer's conduct was malicious, oppressive, or fraudulent.
Attorney's Fees: FEHA provides for recovery of attorney's fees by a prevailing employee, shifting the cost of litigation to the employer.
SB 497 Civil Penalty: Up to $10,000 per violation, paid directly to you, in addition to other damages.
Interest: Pre- and post-judgment interest on past economic losses.

Frequently Asked Questions

Can my employer fire me if I reported harassment, as long as they give a different reason?

Yes, employers frequently cite a "legitimate" reason such as performance issues, restructuring, or a policy violation when they terminate a complaining employee. But the stated reason doesn't insulate the employer if evidence shows the real motive was retaliatory. Under California law, your protected activity only needs to be a "substantial motivating reason" for the termination, not the only reason. Courts look at timing, inconsistency between stated reasons and prior treatment, suspicious changes in performance reviews after your complaint, and other circumstantial evidence to determine the true motive. This is exactly why the SB 497 presumption matters: if the termination came within 90 days of your complaint, the employer must affirmatively prove their stated reason was genuine.

Does SB 497 apply to my case if I reported harassment to HR and was fired two months later?

Potentially yes, but it depends on which statute your harassment complaint implicates. SB 497's 90-day presumption applies to protected activity covered by Labor Code sections 98.6, 1102.5, and 1197.5, which include whistleblower-type complaints about unlawful conduct and wage-and-hour violations. A complaint to HR about sexual harassment may independently trigger FEHA retaliation protections under Government Code section 12940(h), which has its own framework. The two tracks can overlap and reinforce each other. An employment attorney can map your specific complaint and termination to the exact statutes that apply and determine whether the 90-day presumption attaches to your facts.

What if I was not technically "fired" but my working conditions became unbearable after I complained?

This is called constructive discharge, and it is a recognized form of wrongful termination under California law. If your employer made your working conditions so intolerable, through demotion, hostile treatment, isolation, reduced pay, or other forms of retaliation, that a reasonable person in your position would feel they had no choice but to quit, your resignation may be treated legally as a termination. Do not assume that resigning ends your claims. Consult an attorney before you resign if you are in this situation, because the timing of your departure can affect your claims and remedies.

How long do I have to file a claim after I was fired for reporting harassment?

The deadline depends on which legal theory you pursue. For FEHA retaliation claims, you must file a complaint with the California Civil Rights Department (CRD) within three years of the retaliatory act. Once the CRD issues a right-to-sue notice, you have one year to file in court. For Labor Code retaliation claims under section 1102.5 (whistleblower retaliation), the statute of limitations is generally three years from the retaliatory act. Different deadlines apply to other theories, including a shorter one-year window for certain Labor Commissioner penalty claims. Because multiple clocks may be running simultaneously, the safest course is to consult an attorney as soon as possible after your termination.

Should I accept the severance my employer offered after firing me?

Not without legal review. Severance agreements almost always include a release of claims, and signing one extinguishes your right to pursue a retaliation lawsuit. The value of the severance offered may be far less than what your legal claims are worth. A quick severance offer following a harassment complaint can itself signal that your employer is trying to limit its exposure, which may indicate the strength of your case, not its weakness. Have an employment attorney assess the true value of your potential claims before you decide whether to accept, negotiate, or decline the offer.

Can I be retaliated against for supporting a coworker who reported harassment?

Yes, and you have the same legal protections. FEHA explicitly protects employees who assist or participate in harassment complaints and investigations, not just those who make the initial report. If you were demoted, fired, or otherwise punished because you cooperated with a harassment investigation, served as a witness, or helped a colleague file a complaint, you have your own independent retaliation claim. The SB 497 presumption applies to your protected activity the same way it applies to the original complainants.

What if the harassment I reported was not actually illegal, does my retaliation claim still hold?

Possibly yes. California courts have held that an employee's belief that the conduct they reported was unlawful doesn't have to be correct for their complaint to constitute protected activity, the belief must be reasonable, not legally accurate. If you reported conduct that you reasonably believed was harassment, your employer cannot fire you for making the report even if a court later would not characterize the underlying conduct as legally actionable harassment. The focus is on the reasonableness of your belief when you acted, not on the ultimate legal characterization of the underlying conduct.

Does it matter whether my employer is large or small?

Yes, to some extent. FEHA's harassment protections apply to employers with five or more employees. Federal anti-discrimination law under Title VII applies to employers with 15 or more employees. However, California Labor Code protections, including SB 497's retaliation framework, are broader and apply to all employers regardless of size. If your employer is very small, your FEHA harassment claims may have a different threshold analysis, but your retaliation claims under the Labor Code remain available. Your attorney will assess which protections apply based on your employer's size and your specific facts.

The Bottom Line: Retaliation Is Illegal, and California Has Given You Real Tools to Fight It

Being fired after reporting harassment is one of the most damaging workplace injuries an employee can experience, financially, professionally, and personally. California law has consistently expanded protections for employees who speak up, and SB 497's 90-day rebuttable presumption is the most powerful legal development for retaliation claimants in years.

But legal protections only work if you assert them on time, with the right evidence, through the right channels. Every fact matters. Every deadline is real. And every day that passes without legal action is a day of preserved evidence that may be lost.

At McLellan Law Group, LLP , our employment law attorneys represent California employees who have been retaliated against for asserting their rights. We will evaluate your facts, identify every viable claim, and pursue the full measure of what you are owed. If your termination came close in time to a harassment complaint, do not assume the connection is obvious to anyone but you, let us build the case that makes it undeniable.

Fired After Reporting Harassment? Let's Talk.

Time-sensitive deadlines apply to retaliation claims. The sooner you speak with an attorney, the more options you have. Request your complimentary initial consultation with McLellan Law Group, LLP today.

Request a Complimentary Consultation

That Gorgeous Listing Photo Might Be AI-Generated — And California Now Requires Disclosure

Tue, 05 May 2026 14:15:02 GMT

That Gorgeous Listing Photo Might Be AI-Generated — And California Now Requires Disclosure

Claire Melehani

You found the perfect house online. Stunning views. Gorgeous landscaping. Natural light flooded every room. You schedule a showing, drive an hour to get there, and walk into a property that looks nothing like the photos.

The "view" is partially blocked by a building the photos conveniently removed. The landscaping was AI-generated. The lighting was digitally enhanced beyond recognition.

Before 2026, you had limited recourse. Listing photos existed in a gray area — everyone knew they were flattering, but there were few rules about how far that flattering could go.

California changed that. Starting January 1, 2026, new disclosure rules require agents and sellers to tell you when listing photos have been materially altered or generated using AI.

What the New Law Requires

If a listing photo has been digitally modified in a way that materially changes the appearance of the property, the listing must now disclose two things:

That the image has been modified or AI-generated
Access to the original, unedited photo

"Material" is the key word. The law distinguishes between cosmetic adjustments — things like lighting correction, white balance, cropping, and color correction — and substantive alterations that change what the property actually looks like.

Removing a neighboring structure from the background? That's material. Adding landscaping that doesn't exist? Material. Using AI staging to furnish an empty room with furniture that won't be there? Material — though virtual staging has its own developing set of practices.

Why This Matters for Buyers

The obvious concern is wasted time. But the real risk is worse: buyers who make offers based on misleading photos and don't catch the discrepancy until they're deep into escrow. By that point, they may have spent money on inspections, appraisals, and loan processing — all based on a property that was misrepresented from the start.

The new disclosure requirement gives buyers a tool they didn't have before. If a seller or agent used materially altered photos without disclosure, the buyer has a factual basis for claims related to misrepresentation or failure to disclose.

What Sellers and Agents Need to Know

If you're selling property in California, the rules are now clear: if your listing photos materially alter the property's appearance, disclose it. Provide the originals. Don't assume buyers won't notice.

The risk of non-disclosure isn't just an ethics complaint. A buyer who discovers after closing that photos were materially altered without disclosure may have grounds for a fraud or misrepresentation claim — especially if they can show the altered images influenced their decision to purchase or the price they offered.

The Tobacco Disclosure You Might Have Missed

While we're talking about new real estate disclosures, there's another one that took effect on the same date. California now requires sellers to disclose any known tobacco or nicotine residue or smoking history on the Transfer Disclosure Statement.

This might sound minor, but for buyers with health concerns or sensitivities, it's significant. And for sellers, the failure to disclose known smoking activity creates a paper trail that a buyer's attorney can use if the issue surfaces after closing.

What to Do If You Were Misled

If you bought or made an offer on a California property and believe the listing photos were materially altered without disclosure:

Compare the listing photos to the actual property. Screenshot or save the original listing before it's taken down.

Check the listing for disclosure language. Was there any notation that photos were enhanced, AI-generated, or digitally altered?

Review your purchase timeline. If you're still in escrow, you may have cancellation rights. If you've already closed, the analysis shifts to what claims you may have for misrepresentation.

Talk to a real estate attorney. Whether you're trying to get out of a deal or recover costs from a purchase that was based on misleading information, early legal advice makes a difference.

The days of "buyer beware" on listing photos are narrowing. California expects honesty in real estate transactions — and the disclosure rules now extend to the images that sell the property in the first place.

ADVERTISING MATERIAL DISCLAIMER - This communication is an advertisement for legal services by McLellan Law Group, LLP. The content is intended for informational purposes only and should not be construed as legal advice. Each case and its facts are unique, and the outcomes mentioned in this advertisement, if any, are not guarantees of future results. Responsible Lawyer: Claire Melehani, Esq., 20665 4th Street, Suite 202, Saratoga, CA 95070

Your Employer Made You Sign a Training Repayment Agreement, California Says That's Probably Illegal Now

Mon, 04 May 2026 13:55:41 GMT

Your Employer Made You Sign a Training Repayment Agreement, California Says That's Probably Illegal Now

Claire Melehani

For decades, civil litigation in California has been defined not just by trial strategy — but by discovery battles.

If you’ve ever been involved in a lawsuit, you may already know: discovery can be the longest, most expensive, and most frustrating part of a case. Endless document demands. Delays. Objections. Motions to compel.

Beginning January 1, 2026 , California is introducing a rule that may change how lawsuits move forward.

The new law — California Code of Civil Procedure section 2016.090 — is designed to encourage earlier, more transparent information exchange. Here’s what that means for you.

How Discovery Became So Expensive

Before 1958, California didn’t even have formal discovery. Litigation often involved limited document exchange and, in some cases, trial by surprise.

Over time, discovery expanded significantly — especially after major revisions in 1986. While the goal was efficiency, the reality today is often the opposite.

Discovery now frequently:

Drives up litigation costs
Delays resolution
Creates strategic gamesmanship
Pressures parties into settlement based on expense

In many cases, discovery becomes the case.

What Is CCP § 2016.090?

Effective January 1, 2026, CCP § 2016.090 introduces a framework similar to Federal Rule of Civil Procedure 26 .

In qualifying civil cases, parties may be required to provide early, automatic disclosures , including:

Key documents supporting claims and defenses
Witness information
Damage calculations
Insurance details

The goal is simple: reduce delay by requiring both sides to “show their cards” earlier.

Does This Law Apply Retroactively?

This is where many people get confused — and where strategy matters.

CCP § 2016.090 does not apply retroactively to cases filed before January 1, 2026.

Instead, the rule applies to:

Civil actions filed on or after January 1, 2026 , and
Only in cases that fall within the statute’s scope

It is a procedural rule , not a contract-based rule. That means:

It does not depend on when agreements were signed
It applies based on when the lawsuit is filed , not when the underlying dispute arose

Why That Distinction Matters

If your dispute involves:

A contract signed in 2024
Conduct that occurred in 2025

…but the lawsuit is filed in 2026 or later , the new discovery rules may apply.

On the other hand:

If your case is already pending before 2026, the new rule generally will not govern your discovery process

Important Exceptions and Limitations

CCP § 2016.090 does not apply to every case.

The law:

Allows parties to opt out by agreement
Excludes certain matters (including family law)
Does not apply in cases with trial preference
Contains additional statutory limitations

This means early disclosure is not automatic in every lawsuit — it depends on the type of case and how the parties proceed.

Will This Eliminate Discovery Battles?

No — but it may change them.

Even in federal court, where similar rules exist, disputes still happen. However, early disclosure requirements can:

Narrow issues sooner
Reduce surprise tactics
Encourage earlier settlement discussions
Limit unnecessary motion practice

For parties who want to resolve disputes efficiently, this can be a meaningful shift.

What This Means for You

If you are filing — or defending — a lawsuit in California after January 1, 2026, you should expect:

Earlier pressure to organize your evidence
Faster exposure of strengths and weaknesses
Less ability to delay disclosure strategically
Greater importance placed on pre-filing preparation

In other words, litigation strategy starts earlier than ever.

Strategy Still Matters

Even with earlier disclosures, key issues remain:

What must be disclosed — and when
What is protected by privilege or trade secret law
How to preserve leverage while complying with the rule

At McLellan Law Group, LLP, we approach discovery with a clear objective: protect your position while moving efficiently toward resolution.

Preparing for 2026 Litigation

If you anticipate a dispute — whether in business, real estate, employment, or fiduciary matters — now is the time to:

Organize key documents
Preserve communications
Understand your legal position early
Develop a strategy before filing

Because under this new rule, preparation is not optional — it is a competitive advantage.

Final Takeaway

California’s new discovery rule is not about changing the substance of your case — it’s about changing the timing.

It does not apply retroactively to pending cases, but it will apply to many lawsuits filed starting in 2026 , regardless of when the underlying events occurred.

The question is no longer whether discovery will happen.

It’s how early you’re ready for it.

Claire Melehani Sworn In As 2026 President of the Santa Clara County Bar Association

Tue, 17 Mar 2026 12:58:59 GMT

Today marks a meaningful milestone
in my legal career

Claire Melehani

I was sworn in as the 2026 President of the Santa Clara County Bar Association — an organization that has profoundly shaped my development as an attorney. The SCCBA has connected me with exceptional mentors, colleagues, and opportunities for professional growth throughout my career.

Now I have the privilege of leading this vital organization for the next year, and I'm energized about the work ahead. We'll continue strengthening our legal community, supporting our members, and advancing the quality of legal services in Santa Clara County.

If you're an attorney in Santa Clara County or interested in the work local bar associations do, I invite you to follow along. I'll be sharing updates about our initiatives and progress throughout the year.

Thank you for your continued support. Here's to making 2026 a year of meaningful impact for our legal community.

When a Contract Isn’t Worth the Paper It’s On: Key Mistakes That Void Agreements in California

Tue, 20 Jan 2026 18:54:37 GMT

When a Contract Isn’t Worth the Paper It’s On: Key Mistakes That Void Agreements in California

Steven McLellan & Claire Melehani

Not every signed contract is enforceable—and relying on a defective agreement can be a costly mistake.

California contract law is unforgiving when key elements are missing or improperly drafted.

Common Contract Defects

Contracts may be invalid due to:

Lack of mutual assent
Unlawful or unconscionable terms
Failure of consideration
Statutory violations specific to California

Even small drafting errors can have major consequences.

Why “Templates” Often Fail

Generic or AI-generated contracts often:

Ignore California-specific requirements
Conflict with public policy
Fail under real-world disputes

Courts do not fix bad contracts—they enforce or void them.

What Happens When a Contract Fails

A defective contract can lead to:

Loss of expected revenue
Inability to enforce rights
Exposure to counterclaims

Litigation then shifts from enforcement to damage control.

McLellan Law Group, LLP helps clients evaluate contract strength before disputes arise—and defend their interests when they do.

Guardianship Battles and Conservatorship Red Flags: What Families Need to Watch For in California

Tue, 20 Jan 2026 18:46:14 GMT

Guardianship Battles and Conservatorship Red Flags: What Families Need to Watch For in California

Steven McLellan & Claire Melehani

Guardianships and conservatorships are meant to protect vulnerable individuals—but when mismanaged, they can become vehicles for abuse.

Families often sense something is wrong long before they know what steps to take.

Common Red Flags

Warning signs may include:

Sudden isolation of the protected person
Unexplained financial withdrawals
Changes to estate plans under pressure
Resistance to transparency or oversight

These issues may indicate undue influence or breach of fiduciary duty.

Fiduciary Duties Under California Law

Guardians and conservators owe strict duties of:

Loyalty
Care
Full disclosure

Violations can result in removal, surcharge, and personal liability.

When Court Intervention Is Necessary

Legal action may be required to:

Compel accountings
Remove or replace fiduciaries
Recover misappropriated assets
Protect future inheritance

Early intervention can prevent irreversible harm.

At McLellan Law Group, LLP, we approach these matters with both legal precision and sensitivity to family dynamics.

Easements and Encroachments in California Property Disputes: Your Rights Explained

Tue, 20 Jan 2026 18:39:51 GMT

Easements and Encroachments in California Property Disputes: Your Rights Explained

Steven McLellan & Claire Melehani

Real estate disputes aren’t always about ownership—often, they’re about use.

Easements and encroachments can quietly reduce property value, interfere with development, and spark expensive litigation.

What Is an Easement?

An easement grants someone else the right to use part of your property for a specific purpose, such as:

Driveway access
Utility lines
Drainage

Some easements are recorded. Others arise through long-term use or necessity.

Encroachments: A Different Problem

An encroachment occurs when a structure or improvement—such as a fence, wall, or building—extends onto neighboring property without permission.

Encroachments can:

Complicate sales and refinancing
Trigger boundary disputes
Lead to court-ordered removal in extreme cases

Why These Disputes Escalate

Property owners often discover issues only when:

Selling or refinancing
Renovating or developing
Receiving a neighbor’s demand letter

At that point, emotions and financial stakes are already high.

Legal Remedies and Strategy

Resolution may involve:

Quiet title actions
Declaratory relief
Negotiated boundary agreements
Injunctions or damages

The best outcome depends on timing, documentation, and long-term property goals.

McLellan Law Group, LLP advises property owners with a focus on protecting value—not just winning arguments.

Silent Disputes: How Minority Shareholders Can Stop Unfair Business Decisions Before They Escalate

Tue, 20 Jan 2026 17:54:34 GMT

Silent Disputes: How Minority Shareholders Can Stop Unfair Business Decisions Before They Escalate

Steven McLellan & Claire Melehani

Not all business disputes start loudly. Many begin quietly—inside boardrooms, email chains, and financial statements that don’t quite add up.

Minority shareholders are often the last to realize their rights are being compromised.

The Hidden Risk of Majority Control

In closely held businesses, majority owners often control:

Financial decisions
Access to company information
Compensation and distributions

When that power is misused, minority shareholders may experience:

Suppressed dividends
Exclusion from decision-making
Self-dealing transactions

These actions may be legal—or they may constitute breach of fiduciary duty.

Early Warning Signs

Minority shareholders should take action if they notice:

Delayed or incomplete financial disclosures
Sudden changes in management compensation
Asset transfers to related parties
Pressure to sell shares at a discount

Waiting too long can limit available remedies.

Legal Tools Available Under California Law

Depending on the circumstances, minority shareholders may pursue:

Claims for breach of fiduciary duty
Shareholder derivative actions
Accounting demands
Judicial dissolution or buy-out remedies

The key is acting strategically before the dispute hardens into full-scale litigation.

Strategic Intervention Matters

Early legal guidance can:

Preserve leverage
Prevent further financial harm
Open the door to negotiated resolutions

At McLellan Law Group, LLP, we help business owners protect their interests while minimizing unnecessary escalation.

When Non-Compete Agreements Are Enforceable in California: What Employees and Employers Should Know

Tue, 20 Jan 2026 17:41:40 GMT

When Non-Compete Agreements Are Enforceable in California: What Employees and Employers Should Know

Steven McLellan & Claire Melehani

California is famously hostile to non-compete agreements—but that doesn’t mean every restriction on post-employment conduct is automatically illegal.

Both employees and employers are often surprised to learn where the real legal boundaries are.

The General Rule in California

Under California Business & Professions Code section 16600, contracts that restrain someone from engaging in a lawful profession, trade, or business are void as a matter of law . In plain terms, most non-compete agreements are unenforceable.

This rule exists to promote employee mobility and competition—but it is not absolute.

The Exceptions Most People Miss

While traditional non-competes are generally unenforceable, California employment law does allow certain post-employment restrictions , including:

Sale of a business: Non-competes may be enforceable when tied to the sale of goodwill or ownership interests
Trade secret protection: Employers may prohibit the use or disclosure of confidential information
Narrow customer non-solicitation provisions (when carefully drafted and tied to trade secrets)

What matters is how the restriction is written and enforced , not just the label used.

The Risk of Overreaching Agreements

Employers who rely on outdated or overly broad non-compete language risk more than unenforceability. They may face:

Claims for unfair competition
Exposure under California’s Private Attorneys General Act (PAGA)
Civil penalties for attempting to restrain lawful employment

Employees, on the other hand, may unnecessarily limit career opportunities because they assume an agreement is valid when it is not.

What To Do If You’re Facing a Non-Compete

Before signing—or relying on—a non-compete agreement, it’s critical to evaluate:

Whether the restriction is tied to a lawful exception
Whether it actually protects trade secrets
Whether it goes beyond what California law allows

At McLellan Law Group, LLP, we help both employees and businesses navigate these issues strategically, before they turn into litigation.

McLellan Law Group, LLP Nominated as Rising Stars in the 2025 LMBD Awards

Tue, 19 Aug 2025 19:05:23 GMT

McLellan Law Group, LLP Nominated as Rising Stars in the 2025 LMBD Awards

Claire Melehani & Steven McLellan

We are excited to share some incredible news—McLellan Law Group, LLP has been nominated as a Rising Star in the 2025 Law Firm Marketing & Business Development (LMBD) Awards! ��

This prestigious recognition highlights the creativity, innovation, and impact of our marketing work in the legal industry. At McLellan Law Group, LLP, we are committed not only to providing exceptional legal representation but also to building strong, meaningful connections with our clients and community. Our marketing initiatives are designed with the same philosophy we bring to our legal practice: clarity, strategy, and a client-first approach.

The Rising Stars category shines a spotlight on firms who are breaking new ground in how law firms communicate, educate, and engage. Being recognized in this way is a testament to the hard work of our entire team—and the trust and support of our clients and colleagues.

Now, we need your help!
�� Voting is open, and we’d be honored if you would take a moment to support us.

�� When casting your vote, please select Claire Melehani of McLellan Law Group, LLP.
�� Click here to cast you vote!

Your vote not only supports our firm but also recognizes the importance of innovative, client-focused marketing in today’s legal landscape. Thank you for helping us continue to grow and serve with excellence!

Two Rising Stars, One Mission: Excellence in Client Advocacy

Tue, 08 Jul 2025 19:01:17 GMT

McLellan Law Group, LLP Celebrates 2025 Northern California Rising Stars Recognition

We’re honored to share some exciting news from McLellan Law Group, LLP: both Steven McLellan and Claire Melehan i have been named to the 2025 Northern California Rising Stars list by Super Lawyers.

This prestigious recognition is awarded to only 2.5% of attorneys in California each year. Selections are made through a rigorous, multi-phase process that includes independent research, peer nominations, and evaluations of professional achievement.

A Milestone Year for Claire and Steven

For Claire Melehani , this marks her fifth Rising Stars recognition—and her fifth consecutive year receiving the honor (2021–2025). Her commitment to client-centered advocacy, sharp legal insight, and relentless pursuit of excellence have made her a trusted name in California employment and litigation law.

For Steven McLellan , this is his fourth Rising Stars selection and fourth consecutive year (2022–2025) earning this distinction. Known for his strategic approach and thoughtful representation, Steven continues to stand out for his dedication to achieving results for the individuals and business owners he represents.

What This Means for Our Clients

At McLellan Law Group, LLP, awards like these aren’t just personal achievements—they reflect the collective work ethic, values, and mission of our firm. We believe in delivering smart, efficient, and individualized legal solutions for every client we serve. Recognition from our peers reinforces what drives us every day: helping Californians protect what matters most.

As we celebrate this milestone, we remain focused on the future—and grateful to the clients, colleagues, and community members who trust us with their most important legal matters.

Thank You

To our clients: thank you for choosing us to be part of your story. To our peers: thank you for the recognition. And to our team: your excellence makes everything possible.

– Claire & Steven Partners,
McLellan Law Group, LLP

McLellan Law Group Featured by Insider Weekly as Go-To Resource for Tech Workers Facing Layoffs

Tue, 15 Apr 2025 15:33:12 GMT

We’re excited to share that McLellan Law Group, LLP was recently featured in Insider Weekly as a key resource for technology employees in California grappling with sudden layoffs and complex severance agreements. In the article, our firm’s insights on navigating employment disputes and protecting workers’ rights were highlighted, underscoring our commitment to guiding clients through uncertain times.

Serving Tech Workers Statewide

The article spotlighted real-life scenarios in which our team provided tailored counsel to workers facing tight severance deadlines, complex termination clauses, and sudden transitions into a competitive job market. Our in-depth understanding of workplace disputes and layoff-specific challenges, including protections for older employees and how to detect unfair severance terms, proved invaluable to readers seeking real-time guidance.

Employment Law Consultations for Californians

At McLellan Law Group, LLP, we’re committed to protecting employees’ rights. If you’re negotiating a severance package or deciding whether to accept an offer versus pursuing a lawsuit, our experienced employment attorneys can provide tailored advice to safeguard your interests. Request a free consultation today to discuss your situation and explore your legal options. We’re here to guide you every step of the way.

Understanding Partition Actions in California: Process, Key Steps, and Legal Protections

Fri, 21 Mar 2025 15:18:21 GMT

Understanding Partition Actions in California: Process, Key Steps, and Legal Protections

Steven McLellan

When it comes to co-owning property in California, conflicts can sometimes arise. If you’re in a situation where two or more parties own real estate and can’t agree on how to manage it—whether to sell, rent, or renovate—you may need to consider a partition action . Below, we outline how partition lawsuits work, the essential steps involved, and the legal protections California law provides to co-owners. By the end of this article, you’ll have a clearer view of how to navigate this potentially complex process and hopefully avoid real estate litigation .

What Is a Partition Action?

A partition action is a legal process that allows co-owners (cotenants) of a property to divide or sell it when they cannot agree on its use or management. These disputes commonly arise in situations where parents pass real estate to multiple children, or where business partners co-own an investment property. Under California Code of Civil Procedure (CCP) § 872.010 et seq. , any co-owner has the right to file a partition lawsuit to end joint ownership.

Two Main Approaches to Partition

Partition in Kind
The property is physically divided into separate parcels, and each co-owner receives a distinct portion.
Partition by Sale
The entire property is sold, and net proceeds are distributed among co-owners based on their ownership percentages (minus offsets for expenses like taxes or repairs).

Key Steps in a California Partition Lawsuit

Filing the Complaint
One co-owner (the plaintiff) initiates the process by filing a partition complaint in the Superior Court. The complaint identifies the property, the parties involved, and whether partition in kind or by sale is preferred.
Serving Legal Notice
All co-owners (the defendants) must be served with a summons and complaint. This gives them a chance to respond or contest the proposed partition, ownership shares, or any expenses that need to be accounted for.
Determining Ownership Interests
The court examines each co-owner’s stake in the property, including any mortgages, liens, or financial contributions. This step ensures fair allocation of subdivided parcels or sale proceeds.
Referee Appointment
A neutral referee (also called a partition commissioner) may be appointed to conduct appraisals, suggest the fair market value, and recommend how to split or sell the property.
Partition in Kind vs. Partition by Sale

Partition in Kind: If it’s both equitable and feasible to divide the real estate physically, the court may follow the referee’s recommendations and allocate distinct parcels.
Partition by Sale: If splitting the property reduces its value or is not practical, the court orders a sale. Net proceeds are then distributed based on each co-owner’s percentage share.

Final Judgment
After considering any reports or objections, the court issues a final judgment. If a sale is ordered, the property is sold, and proceeds are divided accordingly.

The Partition of Real Property Act in California

California’s Partition of Real Property Act (Code Civ. Proc., § 874.311, subd. (c) provides detailed guidelines especially relevant in inherited or family-owned real estate scenarios.

When Does This Act Apply?

Under Code of Civil Procedure § 874.311(b) & (c) , two conditions must be met:

The property is “held in tenancy in common [and] there is no agreement in a record binding all the cotenants which governs the partition of the property.”
The partition case was filed on or after January 1, 2023 .

When these conditions apply, the court is required to:

Determine the fair market value of the property (often via a court-ordered appraisal) before deciding whether partition is warranted (Code Civ. Proc., § 874.316).
Notify all parties of this appraised value.
Offer co-owners opposed to a sale the option to buy out those wishing to sell (Code Civ. Proc., § 874.317).
Proceed with either partition in kind or partition by sale only if no buyout is completed (Code Civ. Proc., § 874.318).

Because the law uses the term “shall,” these steps are mandatory , aiming to protect co-owners from an unjust forced sale.

Common Challenges in Partition Lawsuits

Ownership Disputes
Co-owners may disagree on their percentage of ownership if one feels they’ve contributed more financially or through labor (e.g., property improvements).
Liens & Encumbrances
Mortgages, tax liens, or judgments complicate how sale proceeds are allocated. Creditors and lienholders often need formal notice.
Accounting & Reimbursements
Co-owners can claim reimbursement for out-of-pocket expenses like property taxes or maintenance. Without clear records, resolving these claims can be time-consuming.
Emotional Ties
When family members or close friends are involved, disagreements can intensify, making cooperative solutions more difficult. The emotional weight can prolong litigation.

Practical Tips for Navigating a Partition Action

Gather Documentation Early
Collect deeds, tax records, and any written agreements or correspondence among co-owners. Comprehensive documentation streamlines the legal process and clarifies each party’s contributions.
Obtain Legal Counsel
Consulting a California real estate attorney who specializes in partition actions is crucial. They’ll help you interpret the relevant statutes, file the necessary paperwork, and advocate for your interests.
Consider Mediation or Settlement
Negotiating outside of court—perhaps via mediation—can save significant time and money, especially in emotionally charged family disputes. Agreeing on property valuation or repair costs may reduce litigation.
Leverage the Buyout Option
If the Partition of Real Property Act applies, co-owners can potentially buy out those who wish to sell. This often prevents a forced sale and helps preserve the property for those who value it most.
Maintain Clear Communication
Keeping lines of communication open among co-owners can lessen misunderstandings. Even if negotiations fail, mutual respect can foster a faster resolution.

Final Thoughts

Partition actions are a powerful legal tool for resolving property co-ownership conflicts, but they can be complex and emotionally charged , especially when family or longtime friends share ownership. By understanding the step-by-step process outlined in California law —including the requirements of the Partition of Real Property Act and mandatory fair market valuation—you’ll be better prepared to protect your rights and interests.

Real Estate Litigation Consultations for Californians

At McLellan Law Group, LLP , our team is dedicated to helping California residents navigate the complexities of real estate litigation , including partition actions . If you’re facing a lawsuit or need guidance on how to safeguard your interests in co-owned property, we can provide tailored advice to protect your assets. Request a free consultation today to discuss your situation, explore your legal options, and develop a strategy that aligns with your goals.

Understanding Arbitration: When It’s Required, How It Works, and the Pros and Cons

Wed, 19 Mar 2025 15:16:39 GMT

Understanding Arbitration: When It’s Required, How It Works, and the Pros and Cons

Claire Melehani & Steven McLellan

Arbitration is an alternative dispute resolution method that can help parties resolve conflicts without going through the traditional court process. In many industries—from employment to consumer transactions— arbitration clauses are increasingly common, often included in contracts or agreements. Below is a closer look at what arbitration entails, when it’s required, and the advantages and drawbacks to consider before deciding whether arbitration is the right path for you or your organization.

What Is Arbitration?

Arbitration is a process where two or more parties submit their dispute to a neutral third party, known as an arbitrator . Unlike mediation, the arbitrator makes a binding decision—similar to a judge’s ruling—after reviewing the evidence and hearing arguments. Arbitration often aims to be faster, more flexible, and less formal than a court trial.

Key Features of Arbitration

Neutral Arbitrator: The arbitrator is typically selected by mutual agreement of the parties or through an arbitration service provider.
Limited Discovery: Compared to civil litigation, discovery (the exchange of evidence) is often more streamlined.
Confidentiality: Arbitration proceedings are generally private and not part of the public record.
Binding Decision: Most arbitration decisions (awards) are binding on the parties, with limited grounds for appeal.

When Is Arbitration Required?

Contractual Arbitration Clauses

Many contracts include mandatory arbitration clauses requiring parties to resolve future disputes via arbitration rather than litigation. These clauses can appear in employment agreements, consumer contracts (such as credit card terms), and various business agreements.

Motions to Compel Arbitration

Advantages of Arbitration

Speed and Efficiency
Arbitration often moves more quickly than the standard court process, which can be bogged down by crowded dockets. In many cases, reduced procedural requirements also shorten the overall timeline for resolution.
Privacy
Proceedings are generally confidential, making arbitration an appealing choice for those who wish to keep sensitive information out of the public record. This is especially beneficial for business disputes involving trade secrets or confidential data.
Flexibility
Parties can typically choose an arbitrator with specialized expertise suited to the nature of their dispute. Scheduling is also more accommodating, allowing for hearings at convenient times and locations rather than being bound to a court’s calendar.
Potential Cost Savings
Although arbitrators charge fees, the streamlined discovery process and shortened timeline can, in many cases, make arbitration less expensive than protracted litigation.

Drawbacks of Arbitration

Limited Right of Appeal
Because arbitration decisions are binding, there are few avenues for appeal. If you believe the arbitrator’s interpretation of the law is flawed, you may have difficulty overturning the award.
Arbitration Costs
While arbitration can be more cost-effective overall, the arbitrator’s fees and administrative costs can add up. These expenses may be particularly burdensome if the dispute is complex or the hearings are extensive.
Perception of Bias
Concerns sometimes arise when the same arbitrator or arbitration firm is used repeatedly by large corporations. Critics suggest that these repeat players may have an advantage, although reputable arbitration providers strive to maintain impartiality.
Reduced Discovery
Arbitration’s limited discovery can be a double-edged sword. It can reduce costs and speed up the process, but it may also prevent one party from fully uncovering evidence they need, particularly when the other party has more documentation.

How to Decide If Arbitration Is Right for You

Review the Agreement: Carefully read any arbitration clause in your contract to understand the scope of disputes covered and the extent of any waivers you might be making (e.g., class-action rights).
Assess Costs vs. Benefits: Compare potential arbitration fees and potential time savings with the costs and extended timeline of litigation.
Evaluate Your Need for Discovery: If your case hinges on extensive evidence, arbitration’s limited scope may put you at a disadvantage.
Seek Legal Advice: Consult an attorney experienced in arbitration to determine if you should file or oppose a motion to compel arbitration, based on your situation.

McLellan Law Group, LLP: Your Partner in Arbitration

At McLellan Law Group, LLP , we understand the intricacies of arbitration and the importance of determining whether it’s the right approach for your legal issue. Our team can help you:

Evaluate the strengths and weaknesses of your case before entering arbitration.
Draft or review contractual arbitration clauses to minimize future disputes.
Represent you effectively in arbitration proceedings.
File or oppose motions to compel arbitration if litigation has already commenced.

If you’re in California and need guidance on arbitration—whether you’re deciding to compel it, resist it, or simply better understand your contract— request a free consultation today. Our experienced attorneys will clarify your legal options and craft a strategy designed to achieve the best outcome.

Final Thoughts

Arbitration can be an efficient, private, and sometimes cost-effective way to resolve disputes, but it’s not a one-size-fits-all solution. The limited avenues for appeal and the potential costs should be weighed against the speed and flexibility arbitration often provides. Whether you’re considering an arbitration clause in a contract or facing a motion to compel arbitration, it’s critical to understand both the pros and cons . If you’re unsure which path to take, consult a legal professional for personalized guidance and to help you make an informed decision.

California’s New Discovery Rules: How Sections 2016.090 and 2023.050 Will Impact Your Case

Wed, 19 Mar 2025 15:00:03 GMT

California’s New Discovery Rules: How Sections 2016.090 and 2023.050 Will Impact Your Case

Claire Melehani & Steven McLellan

California’s recent amendments to Code of Civil Procedure sections 2016.090 and 2023.050 introduce significant changes to the discovery process, aiming to streamline litigation and reduce costs. These changes, which took effect on January 1, 2024, include the adoption of mandatory initial disclosures and stricter penalties for discovery misconduct.

At McLellan Law Group, LLP , we are dedicated to keeping you informed about developments that could affect your business or personal litigation strategy. Here’s what you need to know about the new rules and their implications.

Section 2016.090: Mandatory Initial Disclosures

One of the most notable changes is the introduction of mandatory initial disclosures, which apply to most civil actions filed on or after January 1, 2024. These disclosures are designed to increase transparency and reduce the need for extensive discovery by requiring parties to share key information early in the litigation process.

Note: This section is presently scheduled to sunset on January 1, 2027, where it will no longer be mandatory, but voluntary, for parties to engage in initial disclosures. However, it is likely that the Legislature will review extending the mandatory initial disclosures.

What Must Be Disclosed?

Supplemental Disclosures

Parties are permitted to update their initial disclosures as new information becomes available. Specifically:

Up to two supplemental demands may be made before the trial date is set.
One supplemental demand may be made after the trial date is set, with additional demands allowed by court order for good cause.

Exemptions
Initial disclosures are not required in:

Unlawful detainer cases.
Small claims matters.
Family or probate cases.
Cases granted trial preference under Section 36.
Cases involving self-represented parties.

This shift encourages early case assessment and can help reduce unnecessary delays caused by discovery disputes. These changes also bring California closer to federal discovery rules

Section 2023.050: Mandatory Sanctions for Discovery Misconduct

California has also strengthened enforcement mechanisms for discovery compliance under Section 2023.050. Courts are now required to impose $1,000 monetary sanctions—in addition to any other applicable penalties—when parties, attorneys, or individuals engage in specific bad-faith discovery practices. The mandatory sanctions apply to misconduct regarding requests for production of documents, either through first-party discovery or third-party subpoena.

When Are Sanctions Imposed?

Exceptions to Mandatory Sanctions

The court may excuse sanctions if:

The sanctioned party acted with substantial justification .
Imposing the sanction would be unjust under the circumstances.

Reporting Requirements for Attorneys

Attorneys sanctioned under this section may be required to report the sanction to the State Bar of California within 30 days, depending on the court’s discretion. This provision highlights the seriousness of discovery misconduct.

Rebuttable Presumption for Self-Represented Parties

Self-represented individuals are presumed to have acted in good faith unless proven otherwise by clear and convincing evidence . This presumption protects those without legal representation from automatic sanctions.

Key Takeaways for Civil Litigation

The changes to Sections 2016.090 and 2023.050 are designed to improve the efficiency and fairness of the discovery process. Key benefits include:

Increased Transparency : Mandatory initial disclosures help parties gain a clearer picture of the case early on.
Stronger Enforcement : Mandatory sanctions deter bad-faith discovery tactics, ensuring that parties comply with their obligations.
Reduced Costs : By minimizing discovery disputes and encouraging early resolution, these changes can help reduce litigation expenses.

However, the rules also introduce additional responsibilities. Parties must carefully document their compliance with disclosure and meet-and-confer requirements to avoid sanctions.

How McLellan Law Group, LLP Can Help

Discovery compliance is essential to the success of any case. At McLellan Law Group, LLP, we help clients:

Prepare and verify initial disclosures to meet legal requirements.
Document communications to demonstrate good faith during the discovery process.
Avoid sanctions by staying compliant with updated discovery rules.

Whether you’re navigating litigation or arbitration, our team can help you manage discovery efficiently and protect your interests.

Conclusion

The amendments to California Code of Civil Procedure sections 2016.090 and 2023.050 reflect a significant shift toward greater transparency and accountability in the discovery process. By understanding these changes, parties can reduce the risks of sanctions and position their cases for success.

Litigation Consultations for Californians

At McLellan Law Group, LLP, our team is dedicated to helping California residents navigate the complexities litigation. If you’re facing a lawsuit or need guidance on potential trust litigation, our attorneys can provide customized advice to protect your interests. Request a free consultation today to discuss your situation and explore your options.

If you have questions about how these rules apply to your case, contact McLellan Law Group, LLP to schedule a consultation. Let us help you navigate California’s evolving legal landscape.

Stay informed by visiting our blog regularly and following McLellan Law Group, LLP on Instagram and LinkedIn.

California Discovery Rules FAQs

6 Questions to Ask Before Hiring an Appellate Attorney

Wed, 19 Mar 2025 14:31:16 GMT

6 Questions to Ask Before Hiring an Appellate Attorney

Claire Melehani

Choosing the right appellate attorney can be a daunting task, especially when the stakes are high. The outcome of your case may depend on your ability to find someone who not only understands the intricacies of appeals, but also aligns with your needs. In this article, we will guide you through essential questions that can help you make an informed decision when hiring an appellate lawyer.

1. What is Your Experience with Appeals?

2. What Is Your Case Strategy for My Situation?

Understanding the lawyer's strategy for your specific case is essential. An effective appellate lawyer should be able to articulate a clear and concise plan tailored to your situation. This strategy should take into account the unique aspects of your case, including any previous court rulings, the issues at stake, and the desired outcomes. A well-defined strategy indicates that the lawyer has a thorough grasp of your case and is ready to advocate for your interests.

In addition, consider asking how they intend to address potential challenges that may arise during the appellate process. An adept lawyer should anticipate issues before they become problematic and have contingency plans in place. It’s also helpful to discuss how they approached similar cases in the past, as this can showcase their problem-solving skills and resourcefulness. Ultimately, you want a lawyer who is proactive and adaptable to changing circumstances.

Furthermore, the lawyer’s ability to make you feel comfortable with their proposed strategy is crucial. You should understand the plan and feel confident in its viability. If they can effectively explain their strategic thought process to you, that can significantly bolster your trust in their capabilities.

3. How Do You Charge for Your Services?

4. What is the Likely Timeline for My Appeal?

Understanding the likely timeline for your appeal is crucial, as appeals can often be lengthy and complex. A skilled appellate attorney should be able to give you an estimated timeframe for each phase of the appeal. While no attorney can guarantee exact timing, they should be able to outline a general schedule based on their experience with similar cases and the particular court where your appeal will be heard. Knowing the timeline will help you set realistic expectations and prepare for each step in the process.

Ask them about the typical stages, from filing the notice of appeal to submitting briefs, oral arguments, and waiting for the court’s decision. Each of these steps can take varying amounts of time, depending on the specifics of your case and court backlog. Knowing these stages and how long they might take will help you plan and feel more in control as your appeal progresses. Additionally, if there are potential delays due to factors such as court schedules, procedural issues, or opposing counsel, a knowledgeable attorney can discuss the possible delays with you upfront.

5. Who Will Be Working on My Case, and What Will Their Roles Be?

It’s important to know who will handle different aspects of your case and what role each person will play. While some attorneys personally manage all parts of an appeal, others work with a team of legal professionals, including associates, paralegals, and administrative staff. Understanding who will be involved and how the workload will be distributed can give you a better idea of the attention your case will receive.

Ask if the lead attorney will be primarily responsible for writing briefs, conducting research, and presenting oral arguments, or if these tasks will be delegated. Knowing who is on your case team allows you to understand their respective strengths and qualifications. It’s also helpful to ask if the attorney has specific team members with particular experience in the type of appeal you’re pursuing, as this can add value to your representation. A clear view of each team member’s role will provide transparency and build confidence in your choice.

6. How Do You Communicate with Clients Throughout the Appeal Process?

Conclusion

Hiring the right appellate attorney is essential to navigating the complex and often high-stakes world of appeals. By carefully considering an attorney’s experience, case strategy, and fee structure, you can ensure that you are well-represented by a skilled professional who understands both the legal and personal stakes involved. Each of these factors—experience, strategy, and cost—contributes to the overall quality and effectiveness of representation you can expect. With thorough research and clear communication, you can make an informed choice that aligns with your needs and increases the likelihood of a favorable outcome in your appeal.

Appellate Representation for Californians

At McLellan Law Group, LLP, our team is dedicated to helping California residents navigate the complexities of appeals. If you need guidance on a pending or potential appeal, our experienced attorneys can provide tailored advice to protect your interests. Request a free consultation today to discuss your appeal.

Appeal FAQs

Received a Trust Notice in the Mail? Here’s What You Need to Know

Wed, 19 Mar 2025 13:38:04 GMT

Received a Trust Notice in the Mail? Here’s What You Need to Know

Steven McLellan & Claire Melehani

What to Do If You Receive a Trust Notice in California

If you’ve received a trust notice in the mail, you might be wondering what it means and if you need to take action. California law requires trustees to notify beneficiaries and other interested parties when a trust is being administered, changed, or when certain legal events occur.

Understanding what a trust notice is, why you received it, and what deadlines apply is essential to protecting your rights. Ignoring it could mean losing your ability to challenge the trust or claim assets that rightfully belong to you. In this guide, we’ll explain what a trust notice is, the deadlines to act under California law, and what you could lose if you don’t respond in time.

What Is a Trust Notice?

A trust notice is a legal document sent to beneficiaries and other interested parties when an important event occurs within a trust. Under California Probate Code § 16061.7 , this notice is required when a formerly revocable trust becomes irrevocable due to the settlor’s death.

Why You May Have Received a Trust Notice

You may receive a trust notice for several reasons:

The trust creator (settlor) has passed away – If the trust was revocable during the settlor’s lifetime, it often becomes irrevocable upon their death, triggering a notice requirement.
The trustee has changed – If a new trustee takes over managing the trust, all beneficiaries must be notified.
A power of appointment has been exercised or expired – If the settlor retained a special authority over trust assets (more on this below), a notice must be sent when this authority either takes effect or expires after the settlor’s death.
The trust is being administered or changed – If a trust undergoes a major event, such as a division, termination, or distribution of assets, beneficiaries must be informed.

What Is a Power of Appointment?

A power of appointment is a legal right that allows the trust creator (settlor) to decide who will receive certain assets in the trust and under what conditions . Think of it as a special control mechanism that gives the settlor the ability to change how assets are distributed even after the trust was created.

There are two key ways this power might affect a trust:

The power of appointment is exercised – This means the settlor used their authority to direct how certain assets should be distributed after their death. If this happens, beneficiaries must be notified.
The power of appointment lapses – If the settlor did not use this power before passing away, the assets will be distributed according to the default terms of the trust. Beneficiaries must be informed of this as well.

Why does this matter? If you’re a beneficiary, you need to know whether the settlor made last-minute changes affecting your inheritance or if the default trust terms will apply.

Your Rights After Receiving a Trust Notice

What Happens If You Ignore a Trust Notice?

What Should You Do Next?

If you’ve received a trust notice, take these steps immediately :

�� Step 1: Read the notice carefully and check the 120-day deadline .
�� Step 2: Consult a trust attorney to understand your rights and determine your next steps.

Trust Litigation Consultations for Californians

At McLellan Law Group, LLP, our team is dedicated to helping California residents navigate the complexities of trust litigation. If you’re facing a lawsuit or need guidance on potential trust litigation, our attorneys can provide customized advice to protect your interests. Request a free consultation today to discuss your situation and explore your options.

Final Thoughts

Receiving a trust notice can feel overwhelming, but it’s a critical step in ensuring your inheritance rights are protected. Whether you need help reviewing a trust, contesting its terms, or understanding your legal options , acting quickly and strategically is key.

If you have questions about your trust notice, reach out today to discuss your options and protect your future.

Understanding Your Rights Under the Older Workers Benefit Protection Act (OWBPA)

Thu, 30 Jan 2025 16:29:31 GMT

Understanding Your Rights Under the Older Workers Benefit Protection Act (OWBPA)

Claire Melehani

Navigating the complexities of employment laws can be challenging, especially for older workers who may feel uncertain about their rights. The Older Workers Benefit Protection Act (OWBPA) is a crucial piece of legislation aimed at safeguarding the rights of older employees. This blog will demystify the OWBPA, explaining its importance, key provisions, and what it means for you in the workplace.

What is the Older Workers Benefit Protection Act?

The OWBPA was enacted in 1990 as an amendment to the Age Discrimination in Employment Act (ADEA). Its primary goal is to protect older employees from age-based discrimination in the workplace and to ensure they receive full benefits regardless of their age.

This act arose in response to growing concerns about the treatment of older workers in a job market that increasingly favored younger employees. Employers were often unaware—or worse, dismissive—of the legal ramifications of their actions. The OWBPA seeks to rectify that by ensuring that all workers aged 40 and older are treated equitably.

The importance of the OWBPA cannot be overstated. In today’s world, where workforce demographics are rapidly changing, recognizing the contributions and rights of older workers is essential. This legislation serves as a powerful reminder that age should never be a barrier to employment opportunities, retention, or fair treatment. Every employee, regardless of their age, deserves to work in an environment that respects their rights.

Key Provisions of the OWBPA

The OWBPA contains several critical requirements designed to protect older workers—particularly when employers ask them to waive or release potential age-discrimination claims, such as in a severance agreement. Below are the most significant provisions:

Plain Language Requirement (29 U.S.C. § 626(f)(1)(A)) - The written agreement or waiver must be drafted in clear, understandable terms. Legal jargon should be minimized so employees can easily grasp what they are signing.

Mandatory Disclosures in Group Layoffs (29 U.S.C. § 626(f)(1)(H)) - If multiple employees are being laid off or offered severance packages, the employer must disclose the ages and job titles of both the individuals selected for layoff and those who are not. This transparency helps older workers see whether the layoff disproportionately affects them.

Adequate Time to Consider the Agreement (29 U.S.C. § 626(f)(1)(F)):

21-Day Review Period (Individual Layoff): If you’re the only individual being terminated or offered a severance agreement, you must be given at least 21 days to decide whether to sign.

45-Day Review Period (Group Layoff): If you’re part of a larger reduction in force, you must be afforded 45 days to review the agreement.

7-Day Revocation Period (29 U.S.C. § 626(f)(1)(G)) - Even after signing, you have 7 days to revoke your acceptance. During this window, you can change your mind without losing any severance benefits tied to the waiver.

Written Notice of Waivers - Employers must inform you of the specific rights and claims you’re giving up, including any potential claims for age discrimination. If the employer fails to communicate these details, the waiver may be invalid.

These provisions collectively ensure that older workers are not rushed into signing away their rights. Employers who fail to comply risk having their release or waiver deemed unenforceable , meaning you could still pursue age discrimination claims if you believe you were treated unfairly.

Who is Protected Under the OWBPA?

The OWBPA primarily protects workers aged 40 and older. This legal safeguard encompasses a broad range of workers, from those in entry-level positions to senior management. Understanding who qualifies for protection is paramount for older workers who might face termination or reorganization in their employment.

For many individuals, reaching the age of 40 can also coincide with significant career milestones. It’s important to recognize that this act is not just about preventing discrimination; it’s about promoting fairness and equity in the workplace. Older employees often bring invaluable experience and wisdom to their roles, and this protection acknowledges their contributions.

Additionally, the OWBPA ensures that employees who qualify under its provisions also have the right to challenge any decisions made on the basis of age. Whether it’s a layoff or job reassignment, older workers have the legal backing to question actions they believe are discriminatory.

Understanding Waivers of Rights

One of the significant aspects of the OWBPA is the provisions surrounding waivers. Employers often require older workers to sign waivers in exchange for severance packages, and this section will discuss under what circumstances these waivers may occur.

For a waiver to be considered valid, specific conditions must be met. Firstly, the employee must receive clear and understandable information about what they are waiving. If an employer fails to provide this, it could cast doubt on the validity of the waiver. It’s essential that older employees fully grasp what rights they might be relinquishing.

The OWBPA emphasizes that employees should not feel pressured to sign waivers immediately. The act provides a legal framework that gives workers the chance to reflect on their choices, ideally encouraging them to seek legal advice if they have concerns. This safeguard empowers older workers, ensuring they do not inadvertently waive their rights due to lack of information or understanding.

Common Questions About the OWBPA

1. Can my employer speed up the 21/45-day waiting period?
No. The waiting periods are federally mandated. Attempting to reduce those timeframes or pressuring you to sign sooner could make the waiver unenforceable.

2. Do I lose my severance package if I revoke the waiver within the 7-day period?
Typically, yes. Revoking your acceptance means you’re not agreeing to the terms that grant you severance pay in exchange for releasing claims. However, you preserve your legal right to bring an age-discrimination claim.

3. What documentation should I keep to support an OWBPA claim?
Maintain emails, meeting notes, memos, and any communications that reference your age or the employer’s potential biases. A well-documented paper trail can be pivotal if you need to file a claim.

How to Protect Your Rights Under the OWBPA

Understanding your rights is just the first step. Workers should also be proactive in protecting themselves under the OWBPA.

Stay Informed: Familiarize yourself with the OWBPA’s core provisions, such as the required disclosures and waiting periods. Knowledge is power—understanding your rights helps you make informed decisions.
Document Everything: Keep a detailed record of any discussions or emails relating to severance, layoffs, or reassignments. If you suspect age-based discrimination, document specific instances where age was referenced.

Consult an Employment Attorney: If you’re unsure about signing a waiver or suspect your employer is violating the OWBPA, seek legal advice . An experienced employment attorney can review your severance agreement, advise on negotiations, and help you understand your legal options.

Use the Mandatory Waiting Periods: Don’t let your employer pressure you into signing immediately. The law grants you a specific review period for a reason—use it to gather information, evaluate your options, and, if needed, obtain professional counsel.

Taking these steps ensures you’re informed and equipped to advocate for yourself effectively.

Empowering Older Workers

Understanding your rights under the OWBPA is crucial for ensuring fair treatment in the workplace. This law stands as a strong defense against age discrimination and provides older workers with the tools to make informed decisions—especially during layoffs, reorganizations, or when presented with severance agreements. If you ever feel your rights have been compromised, consult with an employment attorney . By being informed and proactive, you can protect both your career and your peace of mind.

Employment Law Consultations for Californians

At McLellan Law Group, LLP , we’re committed to protecting employees’ rights. If you’re negotiating a severance package or deciding whether to accept an offer versus pursuing a lawsuit, our experienced employment attorneys can provide tailored advice to safeguard your interests. Request a free consultation today to discuss your situation and explore your legal options. We’re here to guide you every step of the way.

5 Key Benefits of Severance Negotiations

Thu, 30 Jan 2025 16:19:32 GMT

5 Key Benefits of Severance Negotiations

Claire Melehani

Severance negotiations can feel daunting, but understanding their benefits can open up new opportunities for those navigating job transitions. In this blog, we’ll explore some of the key advantages of engaging in severance negotiations. Whether you're facing a layoff or leaving a job voluntarily, knowing what you can gain from these discussions can empower you to advocate for yourself effectively.

1. Financial Security During Transition

One of the most significant benefits of severance negotiations is the potential for financial support during your time of transition. Receiving a severance package can provide you with a buffer while you explore new job opportunities, ensuring you have the stability you need during this uncertain period.

Think of it this way: when you leave a job, there’s often a whirlwind of emotions and decisions. The last thing you want on your mind is how to pay the bills. A well-structured severance agreement can afford you the luxury of time. Instead of rushing into the next role simply to make ends meet, you can focus on finding a position that truly fits your skills and aspirations. Imagine the confidence you'll have knowing you have financial backing while you search for that perfect job!

Moreover, severance packages can sometimes include additional financial perks, such as bonuses or extended salary payments. This extra cushion can make a significant difference for you and your family, allowing you to navigate your transition with less pressure. In the end, severance isn’t just about money; it's about securing your future.

2. Continuing Healthcare Coverage

Health insurance is a major concern when leaving a job. Severance negotiations can often include continued healthcare coverage, allowing you to maintain your medical benefits for a specified period. This can be crucial, especially if you require ongoing treatments or prescriptions.

Consider the anxiety that comes with losing your healthcare coverage abruptly. The last thing you need during a career transition is added stress about medical bills or finding new insurance. By negotiating for extended healthcare benefits, you gain peace of mind knowing that you won’t have to sacrifice your health for financial instability. It allows you to focus on securing a new position without the looming pressure of a healthcare gap.

In some cases, employers may offer COBRA coverage, which extends your health insurance for a limited time. While this can be an excellent stopgap, it can also come with steep costs. Negotiating your severance package to include premium coverage options not only helps you save money but also encourages a smoother transition into a new role. Always ensure that your severance gets you the healthcare coverage you need to maintain your well-being.

3. Support for Job Placement Services

Many employers offer job placement services as part of severance negotiations. This additional support can connect you with resources and professionals who can assist with resume writing, interview preparation, and job search strategies, enhancing your chances of landing a new position quickly.

Think about the comfort of having an expert by your side during such an uncertain time. A reliable placement service can provide personalized guidance tailored to your specific career path, increasing your confidence during your job search. Imagine walking into an interview, fully prepared, and feeling confident—these services can help you get there.

Moreover, many of these services offer networking opportunities with other professionals in your industry. This could be a game-changer, especially if you are transitioning to a different field or looking to pivot your career. Severance negotiations can provide not just a financial lifeline, but a pathway to new opportunities and connections that you might not have explored otherwise.

4. Negotiating for an Honorable Departure

Engaging in severance negotiations can provide you the opportunity to leave your employer on good terms. By negotiating a respectful departure, you can maintain positive relationships and professional references that can benefit your career in the long run.

Taking the time to negotiate your severance showcases your professionalism and leaves a lasting impression. It creates an environment where both parties can part ways amicably, paving the way for future collaborations or references. You never know when you might cross paths with former colleagues again, and a respectful departure can lead to unexpected opportunities down the line.

Having a cordial relationship with your former employer can also provide peace of mind. Instead of leaving with festering resentment, you can move on with confidence, knowing that you've handled the situation well. Professionalism during negotiations is key, not just for your current situation but for your entire career trajectory.

5. Flexibility to Pursue New Opportunities

Finally, severance negotiations can grant you the freedom and financial peace of mind to explore new career opportunities that align with your goals and values. With the right severance package, you can take the time you need to find the position that’s truly right for you.

Rather than jumping into the first available job, severance can allow you to implement a strategic job search aligned with your personal and professional growth. This time can be invaluable—not just for finding a new role, but for engaging in self-reflection about what you truly want from your career. Maybe there’s a passion project you’ve always wanted to pursue, or perhaps you’re considering a completely different field. Severance can offer the space to explore those paths.

As you enter this new chapter, remember that you have the chance to redefine your career. The flexibility that comes with a well-negotiated severance package provides you the opportunity to explore chances that fit your life perfectly. No pressure, just potential—what could be more empowering?

Employment Law Consultations for Californians

At McLellan Law Group, LLP , we’re committed to protecting employees’ rights. If you’re negotiating a severance package or deciding whether to accept an offer versus pursuing a lawsuit, our experienced employment attorneys can provide tailored advice to safeguard your interests. Request a free consultation today to discuss your situation and explore your legal options. We’re here to guide you every step of the way.

What is Trust Litigation and Why Might it be Necessary?

Tue, 31 Dec 2024 03:15:00 GMT

What is Trust Litigation and Why Might it be Necessary?

Claire Melehani

Trust litigation can be a complex and challenging area of law, but understanding what it entails and why it may be necessary is crucial for individuals dealing with trust disputes. In this FAQ, we will explore various aspects of trust litigation, including common reasons why it arises and the processes involved.

Common Reasons for Trust Litigation

There are several common reasons why trust litigation may become necessary. One prevalent issue is the mismanagement of trust assets by the trustee. Beneficiaries may feel compelled to take legal action if a trustee fails to act prudently or makes poor investment decisions.

Another significant cause of trust litigation is disagreements among beneficiaries. Conflicts may occur over the interpretation of the trust document or the fairness of how assets are distributed, prompting the need for judicial intervention.

Allegations of breaches of fiduciary duties also often lead to trust litigation. Trustees are required to act in the best interest of the beneficiaries, and any deviation from this duty can result in serious legal consequences.

Moreover, disputes may stem from changes in the law or tax implications that impact the trust's administration differently than the settlor intended. In such cases, parties may seek legal guidance to ensure compliance or challenge the trustee's actions.

How to Initiate Trust Litigation

Initiating trust litigation generally begins with a thorough review of the trust document and related facts. Understanding the specific grounds for your concerns is key to determining if legal action is necessary and how to proceed.

Once you establish a reason for litigation, it is advisable to seek legal counsel who specializes in trust and estate law. An experienced attorney can provide insights into the complexities of your case and guide you through the legal process.

Filing a lawsuit often involves preparing legal documents and submitting them to the appropriate court. This includes outlining the basis for the claims and the requested relief. Good preparation is vital, as it will set the tone for how your case is viewed.

After filing the claim, the parties may engage in discovery, where both sides gather evidence to support their positions. This process can be time-consuming, but it is critical to building a strong case for either party.

Key Takeaways on Trust Litigation

In conclusion, trust litigation is an essential legal process that can help resolve disputes regarding managing and distributing trust assets. Whether due to mismanagement, breaches of fiduciary duty, or disagreements among beneficiaries, trust litigation provides a pathway to seek resolution and protection.

Trust Litigation Consultations for Californians

8 Reasons To Hire an Appellate Attorney

Mon, 16 Dec 2024 02:36:32 GMT

8 Reasons to Hire an Appellate Attorney

Steven McLellan

Navigating the legal system can be daunting, especially after a trial concludes. An appellate attorney focuses on reviewing trial decisions and procedures. Understanding when to seek an appellate attorney can make a significant difference in the outcome of your case. Below are eight compelling reasons that highlight the importance of hiring an appellate lawyer.

1. Understanding the Appeals Process

The appeals process is a critical aspect of the judicial system that allows parties to challenge the outcomes of their trials. It is important to grasp how this process unfolds, as it differs significantly from the initial trial proceedings. An appellate lawyer will explain the steps involved, including filing the notice of appeal, gathering the trial record, and submitting written briefs. Each of these steps must be executed meticulously to avoid pitfalls that could derail your case.

Moreover, the appellate court's function is not to retry the case; rather, it reviews the existing record to determine whether the earlier court made legal errors. Understanding this distinction is vital, as it sets the stage for why a skilled appellate lawyer is essential. They offer guidance on formulating legal arguments based on identified issues, emphasizing the importance of precise documentation and timing in the appeals process.

2. Identifying Legal Errors in the Original Trial

One of the paramount reasons to consult an appellate lawyer is their ability to identify potential legal errors that may have occurred during your original trial. These errors can range from misapplication of law to procedural mistakes that can unjustly affect the outcome of your case. Appellate lawyers meticulously analyze trial transcripts and evidence to pinpoint any errors that could form the basis for an appeal.

Their experience enables them to discern both obvious and subtle errors that a layperson might overlook. Legal errors don't always present themselves in flamboyant ways; they can be intricately woven into the fabric of the proceedings. An appellate lawyer can help articulate these errors clearly in legal documents, thus laying a solid foundation for a successful appeal.

3. Preparing a Strong Appellate Brief

A strong legal brief is the culmination of thorough research and compelling arguments, and it is vital for any appeal. It serves as your primary vehicle for communicating the legal basis of your claims to the appellate court. An appellate lawyer excels in crafting these briefs, including factual outlines and persuasive legal reasoning. The ability to compellingly present your case can make a substantial difference in how the judges perceive it.

Additionally, precise citation of case law and statutes helps substantiate your arguments, while poor preparation can jeopardize your chances of success. An appellate lawyer ensures that all arguments are backed by relevant precedent, so enlisting an appellate attorney, especially when navigating complex legal frameworks, is crucial.

5. Arguing Effectively Before an Appeals Court

When it comes to arguing in front of an appeals court, the stakes are high. This is where the skills of an appellate lawyer truly shine. Unlike trial law, where emotion and jury persuasion are pivotal, appellate advocacy relies on logical reasoning, clarity, and a profound understanding of legal principles. A seasoned appellate lawyer is adept at distilling complex legal arguments into concise, impactful presentations.

Moreover, they are trained to adapt their arguments in response to the judges' questions and concerns during oral arguments. This real-time adaptability is crucial, as the appellate judges often seek clarification or challenge your positions. An experienced appellate lawyer's ability to engage in these discussions with poise can significantly enhance your case's chances of success.

7. Handling the Emotional Toll of Losing a Case

Experiencing a loss in trial can take an emotional toll on litigants. The disappointment can be profound, leading to feelings of despair and frustration. An appellate lawyer not only focuses on the legal aspects but also acknowledges this emotional strain. They provide reassurance and a pathway forward, fostering hope that all is not lost.

Moreover, having someone by your side who understands the nuances of the appeals process can alleviate some of the emotional burden. Appellate lawyers are trained to handle both the mental and legal aspects of your case, providing a dual layer of support that is incredibly beneficial during such challenging times.

8. Maximizing Your Chances of a Favorable Outcome

Ultimately, employing an appellate attorney can dramatically enhance your chances for a favorable outcome on appeal. Their skills and profound knowledge of appellate law establish a framework for effective representation. They don’t just file documents; they tailor arguments designed to sway judges and cite legal precedents that resonate within the appellate court.

Furthermore, an appellate lawyer provides a fresh perspective on your situation, often identifying angles that may have been overlooked during the original trial. This fresh set of eyes is a tremendous asset, ensuring that every possible avenue for success is explored. In the nuanced world of appeals, hiring an appellate lawyer could be critical in rewriting your case's narrative.

Appellate Representation for Californians

Q&A: Reasons to Hire an Appellate Attorney

11 Common Real Estate Litigation Issues in Silicon Valley

Thu, 21 Nov 2024 15:08:05 GMT

11 Common Real Estate Litigation Issues in Silicon Valley

Steven McLellan

In Silicon Valley's competitive real estate landscape, high-net-worth individuals often face unique legal challenges. Understanding the common issues in these situations can prepare you for potential disputes and help protect your investments. Here are some of the most prevalent real estate litigation challenges faced by affluent individuals in this tech hub.

1. Fraud and Misrepresentation Claims

Fraud and misrepresentation claims can dramatically affect successful real estate transactions. In the high-stakes world of Silicon Valley real estate, where massive investments are at play, the risk of encountering deceptive practices can be heightened. Whether it's undisclosed defects in a property or misleading statements about property value, misrepresentations can lead to serious legal consequences. High-net-worth individuals must be vigilant in their due diligence to avoid falling victim to these practices.

In cases of suspected fraud, gathering evidence and acting promptly is vital. Legal recourse may be necessary if you find yourself in this unfortunate situation, which requires the expertise of seasoned real estate attorneys. They can guide you on how to build a compelling case and recover losses. While no one wishes to engage in litigation, being prepared to handle these situations can help protect your substantial investments and maintain the integrity of your property transactions.

2. Disputes Over Property Ownership

Property ownership disputes can lead to some of the most contentious real estate litigation scenarios. In Silicon Valley, where property is highly coveted, shareholders, heirs, and business partners may have differing claims over ownership. Such disputes often arise when multiple parties have invested in a property without a clear document outlining ownership percentages. This can quickly spiral into legal confrontations.

Navigating these disputes can be complex, particularly when emotions and financial stakes are high. Such cases often require thorough legal examination and negotiation. Engaging an attorney knowledgeable about estate law and real estate can help clarify ownership issues and negotiate settlements. In some scenarios, mediation might provide a path forward that allows both parties to walk away satisfied, reducing the time and cost associated with a court trial.

3. Tenant Disputes in Investment Properties

In Silicon Valley, where property investments are a significant part of wealth portfolios, tenant disputes are a common challenge for high-net-worth individuals renting properties from their portfolios. Tenant disputes can arise over a variety of issues, including lease violations, property maintenance concerns, and disagreements over security deposit returns. For landlords with high-value properties, tenant disputes can impact both the value and desirability of the property and lead to potential financial losses and legal complications.

Managing tenant disputes effectively often involves a proactive approach, including thorough tenant screenings, well-drafted lease agreements, and clear communication about property rules and expectations. When conflicts arise, landlords can benefit from seeking legal guidance to address the issues promptly and within the framework of California’s tenant laws. Whether it involves resolving lease violations, pursuing eviction actions, or handling deposit disputes, having a well-structured approach to tenant issues can help investors protect their real estate assets and maintain smooth tenant relations.

4. Neighbor Disputes and Easement Conflicts

Disputes with neighboring properties are common in densely populated and highly competitive real estate markets like Silicon Valley. These disputes can become particularly complex for wealthy property owners, especially when dealing with shared boundaries, access rights, or easements. An easement allows one property owner to use part of a neighbor's property for specific purposes, such as access to a driveway or pathway. These arrangements can become contentious if not carefully documented and agreed upon.

Privacy and exclusivity are often priorities for high-net-worth individuals, which can sometimes conflict with neighboring property rights. Disputes may arise if a neighbor uses or restricts an easement in a way that affects property value, access, or aesthetics. Resolving these conflicts can require careful negotiations, mediation, or, in some cases, full-scale litigation to establish each party's rights. Consulting a real estate attorney to draft or review easement agreements can help prevent disputes and protect property values.

5. Construction Defects and Contractor Disputes

Silicon Valley’s affluent property owners frequently invest in custom builds, luxury renovations, and other high-end construction projects. While these projects can enhance property value and personalize estates, they also carry the risk of construction defects or disputes with contractors. Construction defects can range from structural issues, such as foundation problems, to aesthetic issues, like poor-quality finishes, which can significantly affect a property’s value and livability.

Disputes may also arise with contractors over delays, cost overruns, or deviations from agreed-upon designs or specifications. These issues can result in significant financial losses and protracted legal battles for high-value properties. Property owners should thoroughly vet contractors and secure detailed contracts outlining every aspect of the project. Working with a real estate attorney can be key to seeking remediation, compensation, or other legal remedies when defects are found.

6. Zoning and Land Use Challenges

Another significant area of concern for affluent Silicon Valley property owners is zoning and land use regulations. These laws dictate how properties can be developed and used, and when they change, they can dramatically affect property values. For example, a sudden shift in zoning rules can prohibit certain previously viable developments, leading to potential disputes. High-net-worth individuals may find themselves at odds with local authorities as they seek to maximize the value of their investments.

Moreover, navigating zoning challenges requires an intricate understanding of local laws and procedures. High-net-worth investors must diligently research zoning classifications and potential changes. They should also be proactive about attending local council meetings or engaging with community planning groups to stay informed about upcoming developments in zoning policies. This approach better positions investors and helps mitigate possible legal disputes arising from misunderstood zoning requirements.

7. Issues with Homeowner Associations

Homeowner Association (HOA) disputes are also common in Silicon Valley. While these associations exist to maintain property values and community standards, their rules can sometimes be a source of contention. Some homeowners may disagree with the decisions made by the HOA regarding maintenance, alterations, or the imposition of fines, which can lead to legal action. Issues can range from landscaping regulations to noise complaints, and they can be incredibly frustrating for affluent individuals used to more autonomy over their properties.

Understanding HOA bylaws is essential for residents. Typically, these rules now cover various matters regarding property usage and homeowner responsibilities. High-net-worth individuals should read their association's documents carefully and seek legal advice when disputes arise. When conflicts turn litigious, the outcome can significantly affect property value and overall home enjoyment.

8. Title Issues

Title issues can surface unexpectedly and may create major headaches for property owners. A clear title is crucial in real estate transactions, but various factors, such as liens or historical claims, can cloud a title. High-net-worth individuals faced with title disputes must take these matters seriously. A cloud on title can jeopardize the current investment and future dealings involving the property, making it essential to address these problems head-on.

In Silicon Valley, where the real estate market can be incredibly fast-paced, catching title issues early is critical. This can mean ordering thorough title searches before closing on a property. If any discrepancies are found, they should be addressed immediately. Engaging a title company or real estate attorney can provide the necessary expertise in resolving any issues, ensuring that titles are clear, which will ultimately safeguard your investments.

9. Contract Disputes

Contract disputes are among the most common challenges high-net-worth individuals face in real estate litigation. A contract is essentially a promise made between two or more parties, and conflicts can arise when one party fails to comply with the terms. In Silicon Valley, where real estate transactions often involve significant sums, even the slightest miscommunication can escalate into a serious legal battle. Many buyers and sellers underestimate the importance of clarity and detail in contracts, leading to misunderstandings that may cause financial losses.

For instance, a homebuyer might assume certain fixtures are included in the sale, while the seller believes they are not. If this misunderstanding is not addressed before closing, it can lead to anxiety and legal disputes. To navigate these tricky waters, high-net-worth individuals must engage seasoned legal professionals who understand the nuances of real estate contracts. They can help ensure that all communication is documented, all terms are crystal clear, and provide negotiation strategies to minimize the potential for disputes.

10. Environmental Compliance and Liability Issues

In California, environmental compliance can be crucial for high-net-worth individuals, especially when dealing with older properties or expansive estates. Some properties may have a history of agricultural, industrial, or commercial use, leading to potential contamination issues involving soil, water, or air quality. Environmental regulations at state and federal levels often require detailed remediation efforts to bring properties up to code, particularly if hazardous substances are found.

Non-compliance with these regulations can lead to serious legal consequences, including fines, cleanup costs, and possible litigation from neighboring contaminated properties.

Furthermore, selling a property with undisclosed environmental issues could lead to fraud claims. For affluent property owners, working with environmental consultants and real estate attorneys familiar with environmental compliance can help ensure adherence to regulations, protect investments, and avoid costly disputes.

11. Tax Disputes and Assessment Challenges

With Silicon Valley's high property values come high property taxes, sometimes leading to disputes with local tax authorities. Wealthy property owners may find themselves challenging tax assessments they believe to be excessive or improperly calculated. Disputes can arise over various issues, such as the assessment method, inaccurate valuations, or changes to the property that weren’t adequately reflected in the assessment.

Excessive property taxes can add substantial financial burdens, especially for investment properties or luxury estates. Challenging a tax assessment typically involves gathering supporting documentation, obtaining accurate valuations, and possibly pursuing legal action to achieve a fair valuation. Working with real estate attorneys or property tax consultants can be an effective strategy in helping property owners achieve assessments that more accurately reflect the true value of their property.

Real Estate Litigation Consultations for Californians

At McLellan Law Group, LLP, our team is dedicated to helping California residents navigate the complexities of real estate litigation. If you’re facing a lawsuit or need guidance on potential real estate litigation, our attorneys can provide customized advice to protect your interests and assets. Request a free consultation today to discuss your situation and explore your options.

California No-Contest Clauses: What They Mean for Wills and Trusts

Mon, 11 Nov 2024 17:46:33 GMT

California No-Contest Clauses: What They Mean for Wills and Trusts

Steven McLellan | Elizabeth Handtke

No-contest clauses, also known as "in terrorem" clauses, are legal tools in estate planning that disinherit beneficiaries who contest the terms of a will or trust. These clauses can be critical in California estate planning, where family dynamics and high-value assets can lead to disputes. This article explores how California’s no-contest clauses function, recent changes in their enforcement, and factors to consider if you're thinking about incorporating one into your estate plan.

Changes in the Enforcement of No-Contest Clauses in California

In California, no-contest clauses are governed by Probate Code Section 21311. While these clauses used to be widely enforceable, recent changes have significantly narrowed their scope. No-contest clauses can only be enforced under specific conditions:

Direct contests without probable cause – Challenges based on fraud, undue influence, or lack of capacity.
Property ownership disputes – If a contest questions whether the trustor actually owned the property at the time it was transferred into the trust, the no-contest clause may apply if it explicitly addresses this type of challenge.
Creditor claims – The filing of creditor claims or related actions against the trust can activate a no-contest clause, but again, only if the clause specifies such cases.

Each scenario emphasizes the importance of probable cause, as the courts will not enforce a no-contest clause unless a contest lacks a reasonable basis.

Purpose and Effect of a No-Contest Clause in Estate Planning

No-contest clauses are designed to keep estate planning clear, deter litigation, and prevent unnecessary disputes. For beneficiaries, these clauses serve as a warning: if they contest the will or trust and lose, they risk losing their inheritance. This deterrent effect often preserves family harmony and respects the trustor's wishes.

Factors to Consider

Adding a no-contest clause involves weighing potential risks and benefits. Here are some factors to think about:

Likelihood of Dispute: If you anticipate a specific heir challenging your estate plan, a no-contest clause might discourage litigation.
Gift Amounts: For a no-contest clause to work as intended, leaving a meaningful inheritance can create a strong disincentive. If an heir stands to lose a significant gift, they may be less inclined to contest.
Probable Cause Standard: Courts apply a probable cause test, meaning a contestant must lack reasonable grounds for their claim. This standard ensures that valid challenges with reasonable evidence won’t trigger disinheritance, allowing beneficiaries to address genuine grievances without risking their inheritance.

Late Trust Contests May Trigger No-Contest Clauses

Timing is crucial in no-contest clauses. According to the California case Meiri v. Shamtoubi (2022), late trust contests may result in enforcement if they lack probable cause due to their timeliness. Beneficiaries who receive a notice of trust administration under Probate Code §16061.7 have 120 days to file a contest. Missing this window could lead to a forfeiture of inheritance.

Planning Strategy for No-Contest Clauses

Drafting a no-contest clause requires attention to detail and should be tailored to the specific family dynamics and assets involved. Here are some steps to take:

Be Specific: Define what types of challenges will activate the clause. Explicitly include property disputes, creditor claims, or specific legal challenges if these are concerns.
Include Meaningful Bequests: Rather than disinheriting an heir entirely, consider leaving a bequest substantial enough to discourage litigation. Beneficiaries are less likely to contest if they have something to lose.
Set the Scope Carefully: Broadly worded clauses may lead to unforeseen consequences. Tailoring the language helps prevent unintended challenges and ensures the clause holds up in court.

Types of Contests Enforceable by a No-Contest Clause

Direct Contests Without Probable Cause

Direct contests involve legal claims that question the validity of the trust, such as undue influence, fraud, or lack of capacity. To enforce a no-contest clause against a direct contest, the court must find that the challenger lacked probable cause to initiate the action.

Property Ownership Disputes

If a beneficiary contests a trust by claiming the trustor didn’t legally own certain assets, they may trigger a no-contest clause—if the clause specifically bars such challenges. Explicit language on property ownership disputes can help the clause stand in court.

Creditor Claims

In cases where beneficiaries initiate creditor claims against the estate, a no-contest clause can be enforced if the clause specifically addresses these actions. This provides another layer of protection for the estate from potential challenges.

Case Examples of No-Contest Clauses in California

Real-life cases illustrate how California courts enforce no-contest clauses:

Key v. Tyler (2019) 34 Cal.App.5th 234
In this case, a beneficiary contested the trustor’s mental capacity, arguing that they were not competent to execute the trust. The court found the challenge lacked probable cause and enforced the no-contest clause, leading the beneficiary to forfeit her share of the trust. This case underscores how courts examine probable cause and the risks beneficiaries take in filing unsubstantiated claims.
Donkin v. Donkin (2013) 58 Cal.4th 412
Here, beneficiaries argued undue influence was at play in the trust's formation. Although they contended the claim was legitimate, the court found it lacked sufficient evidence to meet the probable cause standard, enforcing the no-contest clause and disinheriting them. This case highlights how courts require clear, credible evidence for challenges, protecting trustors’ intentions from unsupported claims.
Tunstall v. Wells (2015) 239 Cal.App.4th 1014
In Tunstall, a beneficiary claimed that certain trust property was not legally owned by the trustor at the time of transfer. Since the trust’s no-contest clause addressed property ownership challenges, the court upheld the clause, resulting in disinheritance. This outcome shows the importance of precise drafting and setting the right scope for no-contest clauses.

Are No-Contest Clauses Right for Your Estate Plan?

Incorporating a no-contest clause into your estate plan is a powerful decision that can prevent potential conflicts among heirs. However, it’s not always the right choice for every family. No-contest clauses are particularly effective if:

You anticipate specific beneficiaries may feel entitled to more than they’re allocated.
You want to limit litigation and preserve family harmony.
Your estate plan could be susceptible to legal challenges based on undue influence or mental capacity.

Consulting an experienced estate attorney can help determine if a no-contest clause aligns with your estate planning goals and family dynamics.

No-Contest Clause Assistance for Californians

At McLellan Law Group, LLP, our team is dedicated to helping California residents navigate the complexities of probate litigation and no-contest clauses. If you need guidance on contesting a trust with an existing no-contest clause, our experienced attorneys can provide tailored advice to protect your interests and preserve your legacy.

Understanding the Four Elements of Undue Influence in California Trust Disputes

Fri, 18 Oct 2024 00:12:09 GMT

Understanding the Four Elements of Undue Influence in California Trust Disputes

Claire Melehani & Elizabeth Handtke

When it comes to trust disputes involving financial elder abuse, one of the most common legal claims is that of “undue influence.” Undue influence is “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.” (Cal. Prob. Code, § 86; Cal. Welf. & Inst. Code § 15610.70.)

Proving undue influence in California involves demonstrating that the influence exerted on the person who created the trust was such that it overpowered their free will and resulted in a trust document that does not reflect their true intentions. Although undue influence does not need to have been the sole cause of what caused the person to create the trust document, it must have been of such nature, weight, and force that the trust document would not have been created without it.

Courts consider a number of factors when determining whether undue influence was exerted on a person creating a trust.

Elements of Undue Influence

There are generally four elements that courts will use to evaluate whether undue influence was used. (See Keading v. Keading, 60 Cal. App. 5th 1115, 1125, 275 Cal. Rptr. 3d 338 (2021), reh'g denied (Mar. 9, 2021), review denied (June 9, 2021).)

1. Vulnerability of the Victim

The first element is the vulnerability of the victim. “Evidence of vulnerability may include, but is not limited to, incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation, or dependency, and whether the influencer knew or should have known of the alleged victim's vulnerability.” (Cal. Welf. & Inst. Code § 15610.70, subd. (a)(1).)

2. Apparent Authority of the Influencer

The second element is the apparent authority of the influencer, or in other words, their disposition to exert influence over the trustor. “Evidence of apparent authority may include, but is not limited to, status as a fiduciary, family member, care provider, health care professional, legal professional, spiritual adviser, expert, or other qualification.” (Cal. Welf. & Inst. Code § 15610.70, subd. (a)(2).) A person with apparent authority would most commonly be someone with power or trust with the trustor, such as a caregiver, close relative, or financial advisor.

3. Actions or Tactics Used by the Influencer

The third element is the actions or tactics used by the influencer to gain control over the trustor’s decisions and the opportunities that the influencer had to exert undue influence. (Cal. Welf. & Inst. Code § 15610.70, subd. (a)(3).) Examples of this would be the influencer controlling the trustor’s medications, interactions with others, access to information, or sleep. (Cal. Welf. & Inst. Code § 15610.70, subd. (a)(3)(A).) The influencer may also use affection, intimidation, or coercion as a means of control. (Cal. Welf. & Inst. Code § 15610.70, subd. (a)(3)(B).) Other evidence can include the “initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.” (Cal. Welf. & Inst. Code § 15610.70, subd. (a)(3)(C).)

4. Equity of the Result

Lastly, the result of the trust document is examined to determine whether there is an indication of undue influence. Typically, when the outcome of the trust document is inequitable or unjust, or the influencer receives a disproportionately large benefit, this may indicate undue influence. “Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim's prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.” (Cal. Welf. & Inst. Code § 15610.70, subd. (a)(4).)

It is important to present cumulative evidence of all these elements, since one element taken alone will likely not be enough to support a finding of undue influence. Most importantly, “[e]vidence of an inequitable result, without more, is not sufficient to prove undue influence.” (Cal. Welf. & Inst. Code § 15610.70, subd. (b).)

Proving Undue Influence

Undue influence can be difficult to prove, but circumstantial evidence may be used to show it.

Documentary evidence is also critical to proving undue influence. This would include medical records to show the trustor’s mental and physical condition; statements from friends, family, and professionals who interacted with the trustor; financial records that could indicate control by the influencer or financial dependence; and any communications that depict the nature of the relationship between the trustor and the influencer and any undue pressure.

Steps in the Legal Process

The first step in proving undue influence is to challenge the trust by filing a petition in probate court. Next, during the discovery phase, both sides gather and exchange evidence supporting their claims. Before the possibility of a trial, both parties will often attempt to resolve the dispute through mediation or settlement, but if no settlement is reached, the case will proceed to trial.

Proving undue influence is complex and requires a detailed examination of the circumstances surrounding the trust creation. Ensuring thorough preparation and gathering substantial evidence are critical to building a strong case.

It is important to act promptly, as the statute of limitations for contesting a trust begins to run quickly. If you suspect undue influence in a trust, contact a lawyer experienced in probate to help you navigate these complexities.

What is Mediation and Why You Should Care: Pros and Cons

Mon, 10 Jun 2024 20:25:22 GMT

What is Mediation and Why You Should Care: Pros and Cons

Claire Melehani

What Mediation? What Could Happen If You Mediate?

Mediation is a private, confidential process where a neutral third person (a “mediator”) helps the parties try to resolve the dispute. The neutrals are retired judges, so they are familiar with the law and likely outcome should the case proceed. The parties have the opportunity to describe the issues, discuss their interests, provide each other with information, and explore ideas for the resolution of the dispute. Reaching a resolution in mediation is “voluntary” in that the parties are not required to come to an agreement.

The mediator does not have the power to make a decision for the parties, but she/he can help the parties find a resolution that is mutually acceptable.

There are a number of different ways that mediation can proceed. Now, due to COVID-19, most mediations in California are conducted over Zoom. Most mediations start with the parties and their attorneys together in a short joint Zoom session. The mediator will describe how the process works, explain the mediator’s role, and help establish ground rules and an agenda for the session. Then, most mediators will move to separate sessions, shuttling back and forth between the parties in different Zoom breakout rooms.

If the parties reach an agreement, the mediator and attorneys write the agreement into a written contract that would be enforceable in court.

Potential Benefits of Mediation

Having a mediator can be good, even if it doesn’t get the case settled immediately. Even if the mediation doesn’t result in a same-day settlement, it often sets the stage for settlement down the road.

Mediators also often provide an honest assessment of how they think the case will shake out in court, pointing out both sides’ risks to encourage settlement.

Another benefit is that mediation is less stressful than trial. It’s shorter, the parties don’t have to see each other face-to-face, etc.

Similarly, mediation is less expensive than a trial, so you could save yourself a lot of money (not including potential settlement costs).

If you can reach a settlement, it could resolve the entire case more quickly than if you wait for trial. This is especially true now that California courts are seeing extreme delays due to COVID-19 closures that hit the “pause” button on most court proceedings, creating backlogs.

Even if you don’t settle on the mediation date, you may nonetheless make progress to be built upon in a subsequent negotiations. Alternatively, you may learn something important about the case which will guide you in determining whether or not to proceed if you’re the plaintiff.

Potential Downsides of Mediation

The main downside is the cost. To attend mediation, the parties usually have to pay a deposit with the mediator, split the mediator’s hourly fee, pay their attorneys to write their mediation briefs, and pay their attorneys to attend.

Depending on the jurisdiction, the mediator’s fee, and the attorney’s hourly rates, mediation costs at least a few thousand dollars.

Conclusion

While the pros of mediation usually outweigh the cons, the determination can vary based on the parties’ personalities and willingness to negotiate. Still, since mediation is strongly encouraged by the courts, parties should consider it as well.

If you want more information about how I can help you through the mediation process, feel free to message me through our website to set up a free consultation .

Disclaimer. This is not legal advice. I am “a lawyer” not “your lawyer.”

The Great Divide: California Appellate Courts Split Over Trust Modification Methods

Mon, 10 Jun 2024 20:22:32 GMT

The Great Divide: California Appellate Courts Split Over Trust Modification Methods

Claire Melehani

The First District Court of Appeal recently joined the fray amongst California appellate courts over trust modification procedures. The question causing the split: What is the procedure for modification of a revocable trust under Probate Code section 15402?

Probate Code section 15402 is one seemingly simple sentence: “Unless the trust instrument provides otherwise, if a trust is revocable by the settlor, the settlor may modify the trust by the procedure for revocation.”

But what is “the procedure for revocation?” Those four words created a divide in appellate authority over this question: Can a person modify their revocable trust by the statutory revocation procedure if the trust document sets forth a different means of modification that is not explicitly exclusive?[1]

Our appellate courts adopted both restrictive and permissive approaches.

The Permissive Approach

Last year, in Haggerty v. Thornton (2021) 68 Cal.App.5th 1003, the Fourth District Court of Appeal diverged from its counterparts and instead adopted a “permissive” approach. The permissive approach allows amendment by the statutory method of section 15401(a)(2) unless the amendment procedure is explicitly exclusive.

The Restrictive Approach

Until recently, only the Third and Fifth District Courts of Appeal were on the other side of the issue. The Third District Court of Appeal, in Pena v. Dey (2019) 39 Cal.App.5th 546, and the Fifth District Court of Appeal, in King v. Lynch (2012) 139 Cal.App.4th 1186, adopted a “restrictive” approach to trust modification.

The restrictive approach limits a person’s ability to modify their trust to the method set forth in the trust document, regardless of whether the trust’s language explicitly states that method is the exclusive means of modification. In other words, the restrictive approach precludes the statutory trust modification method if the trust provides an alternative means of modification.

The First District Court of Appeal Takes Sides

This year, the First District Court of Appeal joined the debate in Balistreri v. Balistreri (2022) 75 Cal.App.5th 511.

In 2017, Mr. and Mrs. Balisteri created a trust that specified a method of modification:

“Any amendment, revocation, or termination . . . shall be made by written instrument signed, with signature acknowledged by a notary public, by the trustor(s) making the revocation, amendment, or termination, and delivered to the trustee.”

(Id. at p. 514.) The Balisteris signed an amendment the day before Mr. Balisteri died, but the amendment was not notarized. (Ibid.) Mrs. Balisteri filed a petition to confirm the validity of the amendment, since the amendment complied with the requirements of 15401(a)(2). (Id. at p. 516.) Her stepson opposed the petition. (Id. at p. 515.)

The First District Court of Appeal held that the amendment was invalid. (Id. at p. 522.) The First District reasoned that when a trust instrument specifies a means of modification, that method must be used. (Ibid.) Any specified procedure is mandatory, regardless of (1) whether the method of amendment is exclusive and (2) whether the trust specifies different means of amendment and revocation.

In adopting this restrictive approach, the First District Court of Appeal joined the Third and Fifth District Courts of Appeal.

Trust Modifiers Beware

While the Fourth District Court of Appeal seemingly stands alone in Haggerty v. Thornton (2021) 68 Cal.App.5th 1003, the California Supreme Court granted review in December 2021. The High Court is thus poised to resolve the rift.

It is unclear how quickly the Supreme Court will decide Haggerty and provide a decisive interpretation of section 15402. For now, anyone modifying a California trust should consult a lawyer and proceed with caution.

Prevailing Party Attorneys’ Fees Through Indemnity Provisions

Mon, 10 Jun 2024 20:05:15 GMT

Prevailing Party Attorneys’ Fees Through Indemnity Provisions

Steven McLellan

Usually, before filing a lawsuit in a business dispute, a client wants to know whether she can receive her attorneys’ fees as a prevailing party in litigation. For the most part, it is an easy question–check the contract for a prevailing party attorney fee provision. However, sometimes contracts lack such provisions, but that does not mean the client is out of luck. Indemnity provisions may allow the client to recover prevailing party attorneys’ fees.

I. What is indemnification?

Generally, indemnification requires Party 1 to pay Party 2 for any obligation Party 2 paid because of Party 1’s conduct. For example, Party 1 does an act against Party 3, where Party 3 then sues Party 2. Party 2 may have a claim against Party 1 for indemnification. Such a situation may occur when an independent contractor harms a customer, and the customer sues the company. Indemnification may arise from contract, or other equitable means.

As this example shows, indemnification may arise when a third-party is involved. But, what about claims between Party 1 and Party 2? Indemnification is not limited to only third-party claims, depending on the indemnity provision’s scope. And that scope determines whether your client may obtain prevailing party attorneys’ fees.

II. Obtaining prevailing party attorneys’ fees through indemnification provision

Generally, an indemnification provision allows one party to recover costs incurred defending actions by third parties, not attorney fees incurred in an action between the parties to the contract. For example, let’s say an indemnification provision states “Seller … agrees to indemnify and save [b]uyer … harmless from any and all losses … including … reasonable attorney’s fees … arising from any cause or for any reason whatsoever.” Courts hold that such language does not permit parties to the contract to recover prevailing party attorneys’ fees. However, other language may exist that would show prevailing party attorneys’ fees are recoverable from an indemnity provision between parties to the contract:

Where one party agreed to indemnify the other for losses “ ‘whether or not they have arisen from or were incurred in or as a result of any demand, claim, action, suit, assessment or other proceeding or any settlement or judgment….’ ”

Where the contract provided indemnity against all losses “ ‘whether or not arising out of third party Claims.’ ”

The indemnity provision specifically applied to an “ ‘action or suit by or in the right of the corporation to procure a judgment in its favor.’ ”

There is no one set method for obtaining prevailing party attorneys’ fees through indemnification provisions. But, knowing that indemnification provisions may also provide for prevailing party attorneys’ fees can assist in your decision making in whether or not to file a lawsuit.

Waiving Or Losing A Fraud Claim

Mon, 10 Jun 2024 20:00:14 GMT

Waiving Or Losing A Fraud Claim

Steven McLellan

Typically, a fraud claim is easy to understand. One partner lied, and the other relied on the lie to her detriment. Yet, sometimes, the parties still have a business relationship after learning of the fraud. Losing or waiving your fraud claim can occur without your realizing it. For example, signing an amendment to the contract granting new benefits may constitute a waiver.

First Hypothetical: Requesting More Time To Act

Imagine you purchased interests through an installments in a limited liability company based upon certain financials shown to you by the managing member. You will receive regular distributions and bonus distributions based on the company’s sales. However, you now discovered that those financials were artificially increased to justify a higher purchase price. You still have a few more installments to pay. Further, while deciding what to do, you received the regular distributions. Does asking for more time to consider paying the other installments, or does the receipt of the distributions, constitute waiving or losing your fraud claim?

The Bagdasarian Case

The California Supreme Court analyzed this subject in Bagdasarian v. Gragnon (1948) 31 Cal.2d 744. The case arose from a sale of a farm. The sellers falsely represented the farm’s sales in the prior year. The purchasers acquired a note to pay for the farm, yet defaulted. The purchasers sued for fraud. The sellers argued that the purchasers lost the fraud claim because the purchasers “made payments on the notes, sought and received [the seller’s] advice and assistance in the operation of the farm, [and] requested an extension of time for payment on the notes.”

The Supreme Court rejected the argument. The court explained that “[w]hen a party learns that he has been defrauded, he may, instead of rescinding, elect to stand on the contract and sue for damages, and in such case his continued performance of the agreement does not constitute a waiver of his action for damages.” If a party learned of fraud and decided to continue with the contract, the party “must not make any new agreement or engagement respecting it; otherwise, he waived the alleged fraud.”

So, did the purchasers lose their fraud claim by asking for more time to pay and for help with the farm? The court answered no: “We think it unjust and unreasonable to hold as a matter of law that the mere asking of a favor should deprive an innocent person of rights arising from an unquestionably fraudulent act.” The court also doubted that granting an extension of time would “constitute a waiver in the absence of estoppel or the making of a new agreement supported by consideration.”

So, back to our hypothetical. Just receiving regular distributions or asking for more time to pay would likely not waive a fraud claim.

Second Hypothetical: Signing An Amendment To Contract

Let’s create a new wrinkle–the managing member approaches you with an addendum that gives you a greater bonus distribution, but not a regular distribution. And you accept because you believe in your ability to increase sales. Will you be waiving or losing your fraud claim with respect to the regular distributions, the part of the original contract that was not amended?

The Oakland Raiders Case

In Oakland Raiders v. Oakland-Alameda County Coliseum, Inc. (2006) 144 Cal.App.4th 1175, in the 1990s, the professional football team Raiders sought to return to Oakland. The arena where the Raiders would play, the Coliseum, promoted Personal Seat Licenses (PSL’s) and club and luxury suites. The Coliseum informed the Raiders that the upcoming games for 1995 sold out in the first phase, and that included 44,700 PSLs. However, while some 45,000 PSL applications were received, only 37,000 PSL seats were assigned. Subsequently, the Raiders signed an agreement with the Coliseum to play in Oakland for 16 seasons. The Raiders learned the true facts afterwards.

So, the Raiders signed a new agreement, which incorporated and supplemented the original agreement. The Raiders received certain benefits as a result. Also, the new agreement stated that “except as otherwise specifically supplemented, interpreted or modified by this Supplement, all terms and provisions of the [original agreement] shall remain unmodified and in full force and effect.”

Afterwards, the Raiders sued for fraud and sought rescission of the agreements. The jury held that the Coliseum failed to prove that the Raiders had waived the fraud claim.

The Majority Opinion

Yet on appeal, the Oakland Raiders court, relying in part on Bagdasarian, held that the new agreement constituted an implied waiver of the fraud. The court explained that the core holding of prior California Supreme Court cases was that “one who, after discovery of an alleged fraud, ratifies the original contract by entering into a new agreement granting him substantial benefits with respect to the same subject matter, is deemed to have waived his right to claim damages for fraudulent inducement.” Importantly, the court explained the waiver doctrine as “an application of the doctrine of equitable estoppel.”

As a quick aside, the theories of waiver and equitable estoppel constitute defenses to certain torts. In short, waiver focuses on the intent of the party to relinquish its tort claim. Equitable estoppel focuses on the harmed party’s conduct.

With that in mind, the court held that the Raiders committed an implied waiver of its fraud claim. The Raiders negotiated a new agreement that concerned the same subject matter, modified the parties’ rights, granted the Raiders significant benefits, and reaffirmed the original agreement’s validity. Hence, as a matter of law, the Raiders could not sue.

The Dissenting Opinion

The dissenting opinion criticized the majority for eviscerating the waiver standard. The dissent stated that the jury may have determined that the amendment “was simply an agreement sought by both [Coliseum] and the Raiders for their mutual benefit, rather than agreement through which the Raiders, knowing of the fraud, affirmed the validity of the original contract and accepted substantial benefits not found therein, thereby demonstrating an intent to waive any fraud claim regarding the original contract.” The dissent argued the court took away the jury’s ability to consider intent by changing the analysis to estoppel, which focuses on conduct. And, the dissent explained “[t]here may be all sorts of reasons why a defrauded party would try to cut its losses and seek at least half a loaf through a subsequent agreement, without giving up its rights to be fully compensated for the fraud arising from the original agreement.”

Reconciling The Waiving Or Losing Of Fraud Claim In The Hypotheticals

So, back to our hypothetical. The Oakland Raiders case indicates that signing an addendum that provided you with greater benefits would likely mean you cannot sue for fraud. Yet, remember, the Bagdasarian court concerned purchasers who requested assistance with the farm and an extension of time to pay. The purchasers would have received a benefit by those amendments. The court though ruled that the purchasers had not lost their fraud claim. So, why the different results? The Oakland Raiders case emphasized that “ratifying the earlier contract sets this case apart.” With the ratification, the Raiders had induced the Coliseum to change its position to its detriment. So, following Oakland Raiders, if the addendum has language essentially stating that the original agreement is in full force and effect, then you will likely lose the ability to sue for fraud.

This is a difficult area of the law. A lawyer experienced in this arena will help guide you through this to assist you from losing or waiving your fraud claim.

Dealing With “I Don’t Recall” In Written Discovery

Mon, 10 Jun 2024 19:37:12 GMT

Dealing With “I Don’t Recall” In Written Discovery

Steven McLellan

Attorneys fret when receiving an “I don’t recall” answer in deposition and try to ensure the witness cannot wiggle out of the response at trial. But what if you receive an “I don’t recall” in a written discovery response? Knowing the California Civil Discovery Act will help you prevent the other side from revealing new information at trial responsive to your discovery requests, can help bolster a claim for sanctions against the opposing party, and provide better insight to your client on the case.

First, courts have been clear that evasive answers like “I don’t recall” “are an open invitation to sanctions.” (Deyo v. Kilbourne (1978) 84 Cal.App.3d 771, 783 (“Deyo”) [citing Stein v. Hassen (1973) 34 Cal.App.3d 294, 300].)

Second, the discovery rules as to requests for admission and requests for inspection provide mechanisms to ensure the responding party does not ambush the request party in trial by an “I don’t recall” response. For requests for admissions, when the responding party states it does not recall, it must “state in the answer that a reasonable inquiry concerning the matter in the particular request has been made, and that the information known or readily obtainable is insufficient to enable that party to admit the matter.” (Code Civ. Proc., § 2033.220, subd. (c).)

Similarly, for requests for inspection, if the responding party states that it does not have documents or doesn’t recall any documents, the responding party must do two things: (1) it “shall affirm that a diligent search and a reasonable inquiry has been made in an effort to comply with that demand”; and (2) it must explain why it cannot comply, for example, “because the particular item or category has never existed, has been destroyed, has been lost, misplaced, or stolen, or has never been, or is no longer, in the possession, custody, or control of the responding party.” (Code Civ. Proc., § 2031.230.)

However, for interrogatories, the discovery statute does not require a statement of a good faith and reasonable effort to obtain a response. Instead, when a responding party “does not have personal knowledge sufficient to respond fully to an interrogatory,” then the responding party must so state–provided it has made “a reasonable and good faith effort to obtain the information by inquiry to other natural persons or organizations.” (Code Civ. Proc., § 2030.220, subd. (c).)

Yet the interrogatory code provision does not require the responding party to state it made the reasonable and good faith effort. This is problematic where, in California, no obligation exists to update discovery responses, unlike in federal courts. (Biles v. Exxon Mobil Corp. (2004) 124 Cal.App.4th 1315, 1328.) Further, in California, responses to interrogatories do not “prevent the defendant at the trial from relying on subsequently discovered facts [….] In fact, such answers would not even prevent production of facts now known to defendant but not included in the answers, upon a proper showing that the oversight was in good faith.” (Singer v. Superior Court of Contra Costa County (1960) 54 Cal.2d 318, 325.)

Interestingly, a court has held that just stating “inability to respond” is not actually a response. (See Sinaiko Healthcare Consulting, Inc. v. Pacific Healthcare Consultants (2007) 148 Cal.App.4th 390, 406 [“Defendants did not ‘respond’ to the interrogatories by stating that they were ‘[unable] to respond.'”].) Hence, without the responding party stating it made a reasonable and good faith effort to respond, the trial court may hold that there is no response, and deem waived any objections. (See id. at p. 407; Code Civ. Proc., § 2030.290, subd. (a).) So, the failure to include a statement can result in significant penalties against the opposing party. (See also Deyo, supra, 84 Cal.App.3d at p. 782 [“If a person cannot furnish details, he should set forth the efforts made to secure the information. He cannot plead ignorance to information which can be obtained from sources under his control.”].) So, responding parties should include a statement of reasonable and good faith effort to obtain the information despite the lack of a requirement in the statute.

Getting an “I don’t recall” in written discovery does not mean you should assume that the other side cannot change its response later. Instead, get the necessary qualifiers of a reasonable and good faith effort to lock in the other side and make them less credible if they try to change at trial. This is particularly important when the case is a “she-said she-said.” Further, it aids your client so that the facts are pinned down and you can provide a better evaluation and next steps to your client.

7 Rights To Know Before You Protest

Thu, 27 May 2021 20:28:06 GMT

7 Rights To Know Before You Protest

Claire Melehani

You have a First Amendment right to protest. However, the government is allowed to place certain narrow restrictions on the exercise of your rights. Make sure you’re prepared by brushing up on your rights before heading out into the streets to protest.

1. You Have The Right To Peacefully Protest In Public Forums

The First Amendment guarantees our rights to freedom of speech & assembly. So you have the First Amendment right to protest – peacefully – on public property.

If you’re on private property, the property owner can ask you to move. But streets, sidewalks, parks, and similar public spaces are “traditional public forums” that have always been a place where people can peacefully protest. You can protest in front of government buildings as long as you are not blocking access to the government building or interfering with other purposes the property was designed for.

2. Counter-Protesters Have The Same First Amendment Right to Protest

Police must treat protesters and counter-protesters equally. Police are permitted to keep antagonistic groups separated but should allow them to be within sight and sound of one another.

3. You Have The Right to Film Police Officers When They Are Policing At A Protest (A Public Space)

If they ask you to step back, if they say that you’re interfering in their work, then they can ask you to give them a little bit of space.

BUT you don’t have to stop filming.

4. Police Cannot Confiscate Or View Your Protest Photos or Videos Without a Warrant

If the officer says, “I need you to delete that photo” or “Let me look through those photos” the officer does not have the right to look through your photos. You do not have to consent to their request to look through your phone. The police would need a warrant from a judge in order to search your phone.

Even IF they have a warrant, they don’t have the right to delete your photos.

5. If Approached By Police At A Protest, Stay Calm, Keep Your Hands Visible, & Don’t Obstruct

If a police officer approaches you to “chat” while you’re at a protest, say as little as possible.

In some states, police do have the right to ask you your name. Stay calm & keep your hands visible.

6. You Have the Right to Ask The Officer If You’re Free To Leave

If the officer says “yes” then that means that you’re not being detained. Calmly walk away. If the officer says, “No, you cannot leave” then that means you are being detained.

7. You Have The Right To A Phone Call, But It Might Not be Private

If you are being detained, you have the right to ask for a phone call. If you call a lawyer, the police technically cannot listen to your phone call, but that is no guarantee that they aren’t listening.

But, if you call someone besides an attorney, the police are likely to listen in. So, if you use your phone call to ask family or friends to help, just let them know (1) where you are and (2) how they can come help you.

What To Do If You Believe Your Rights Have Been Violated

When you can, write down everything you remember, including the officers’ badge and patrol car numbers and the agency they work for.

Get contact information for witnesses.

Take photographs of any injuries.

Once you have all of this information, you can file a written complaint with the agency’s internal affairs division or civilian complaint board. You can also contact us

Depose Your Own Witness to Preserve Their Testimony

Mon, 10 May 2021 20:30:52 GMT

Depose Your Own Witness to Preserve Their Testimony

Claire Melehani

If you were to ask most lawyers whether it is wise to depose your own witness, you’d likely get a response touting the following, conventional, but flawed, opinion:

Never do a direct examination of your own witness at a deposition. Your witness is under your control, so you have the ability to fix any issues in their testimony later. For example, if opposing counsel uses the deposition testimony against you in a motion, you’ll just get a declaration from your witness that explains away the problem. If opposing counsel uses the witness’ bad testimony during trial, you simply call your witness to the stand to fix any issues with their deposition testimony. Why broadcast your strategy before the need arises?

Though that strategy may have been reasonable in a pre-COVID-19 world, it simply doesn’t hold water during a pandemic. In a time where more than 6.9 million people in the United States have been infected with the coronavirus and over 200,000 have lost their lives,[1] attorneys have good reason to worry about whether their witnesses will be available to swear to declarations or testify during trials. In most cases, trial is far removed from the deposition date. Meanwhile, coronavirus case numbers remain persistently high across much of the country. Deaths, though still well below their peak spring levels, averaged more than 1,000 per day in August — more than double the average from early July.[2] In mid-September, deaths still averaged around 850 per day; with the fall flu season rapidly approaching doctors and epidemiologists fear that the minor progress made in stemming coronavirus-related mortality will be lost.[3] Here in the San Francisco Bay Area, despite stringent self-isolation protocols, the spread continues, and over 15,000 Californians have already lost their lives.[4]

If your witness’ age or underlying medical conditions place them at high risk of coronavirus-related mortality, then you should strongly consider whether to depose your own witness – especially if your witness lives in a state that is a coronavirus hot spot and/or lives in a nursing home.[5]

My unconventional advice on this issue isn’t limited to the current pandemic. In any case involving an elderly witness, a witness with a terminal illness, or a witness with multiple chronic health conditions that put them at increased risk, it is unwise to rely on your ability to present the witness’ live testimony during trial. We all know that the only things you can rely on are “death and taxes” and, unfortunately, during a pandemic the former may hit closer to home than you anticipate. Should your key witness succumb to coronavirus, the conventional wisdom of (1) choosing not to depose your own witness or (2) not asking questions of your own witnesses at a deposition noticed by the other side may be dangerously wrong.

What should law firm clients who are at high risk of COVID-19 complications know?

First, if you are an attorney reading this article, I suggest you make your clients aware of the pros and cons of choosing to depose your own witness, discussed herein, so that you can help your client make an informed decision.

If you are a party to a lawsuit and you already have an attorney, feel free to email this article to them. Your attorney may have a good, strategic reason for waiting to depose your own witness who is at-risk of COVID-19-related mortality, but you should start a candid discussion.[6]

Finally, if you have yet to file a complaint but expect you’ll need to soon, you should speak with an attorney sooner rather than later. Why? Even if you aren’t ready to file a lawsuit now, your attorney can start collecting evidence and depose witnesses who are at high risk of later unavailability even before the complaint is filed. (See CCP § 2035.010 et. seq.) The longer you wait to start collecting evidence,[7] the higher the risk of key witnesses with pre-existing health issues succumbing to COVID-19.[8] If you depose key witnesses who are at high risk of death or other forms of unavailability that would prevent them from testifying at a later date, you will preserve potentially helpful testimony and discover the location of other key evidence. But remember that, absent a showing of good cause,[9] you can only depose witnesses once. (CCP § 2025.610.)

So, if you decide that you should depose your own witness, what comes next?

Normally, you cannot use your own client’s deposition transcript at trial – unless the witness is unavailable. (CCP § 2025.620, subd. (c)(2)(C).) And some of the clearest forms of unavailability are serious illness or death.

Once the court determines that a witness is unavailable to testify, then the witness’ deposition transcript can be used at time of trial. The questions and answers must be read into the record during trial, which allows the testimony to be considered by the judge or jury.

Even better, you could have your witness’ deposition recorded by a videographer. This adds to the deposition costs, but if you need to present the video at trial because the witness is unavailable, having a means for the fact finder to see your witness’ credibility will be well worth it – not to mention that a video will be much more likely to hold the jurors’ attention.

Under normal circumstances, doing a direct examination during your witness’ deposition is seldom advised, as it gives opposing counsel advance notice of your case theory. However, during a pandemic, I’d much rather forecast my strategy than risk not having key testimony at all. Life has been fundamentally reordered because of the virus – so too must litigation strategy change.

If you believe that you or your key witness(es) are at increased risk of coronavirus-related mortality, you may schedule an initial consultation to discuss the issue with Claire and the GED team.

[1] https://www.nytimes.com/interactive/2020/us/coronavirus-us-cases.html, last accessed on September 22, 2020

[2] Id. (Data accessed on August 28, 2020.)

[3] Id. (Data accessed on September 22, 2020.)

[4] Ibid.

[5] About 40 percent of deaths from the virus in the United States have been tied to nursing homes and other long-term care facilities. (https://www.nytimes.com/interactive/2020/us/coronavirus-nursing-homes.html, last accessed on September 22, 2020.)

[6] That being said, it doesn’t hurt to you make sure they are aware of both sides of the debate on this issue. Your attorney can help make the best decision for your case when armed with information. Knowledge is power.

[7] Reasonable prelawsuit investigations are protected by the First Amendment right to petition the government for redress of grievances (right to sue for injury). (See Tichinin v. City of Morgan Hill (2009) 177 CA4th 1049, 1069 [discussing examples of reasonable prelawsuit investigations, including hiring a private investigator to conduct legal surveillance of adversary].)

[8] As time passes, even under normal, non-pandemic circumstances, witnesses may forget important facts, or inadvertently lose or dispose of documents that could be critical evidence in your case.

[9] This author believes good cause may exist where you deposed a witness early out of fear of the witnesses later unavailability, said unavailability did not materialize, and the party seeking an additional deposition subsequently discovered additional information you did not have an opportunity to ask the witness about during the initial deposition. Attorneys can petition the court to request a witness’ second deposition. (See CCP § 2025.290(a).)

mclellan-law-group

Unpaid Commissions in California: How to Recover What You’re Owed

Unpaid Commissions in California:

﻿ How to Recover What You’re Owed

Claire Melehani

What California Law Says About Commissions

Common Ways California Employers Withhold Commissions

What You Can Recover for Unpaid Commissions in California

Statutes of Limitations: How Long You Have to File an Unpaid Commission Claim

How to Pursue an Unpaid Commission Claim in California

Frequently Asked Questions About Unpaid Commissions in California

The Bottom Line: Earned Commissions Are Wages — Protect Them

Golden Parachutes in California: What Executives and Employers Need to Know

Golden Parachutes in California: ﻿ What Executives and Employers Need to Know

Claire Melehani

What Is a Golden Parachute? Components and Triggers

The Federal Tax Framework: IRC Sections 280G and 4999

California Law Considerations

What Can Go Wrong: Common Golden Parachute Disputes

For Executives: Negotiating and Protecting Your Golden Parachute

For Employers: Compliance and Risk Management

Frequently Asked Questions About Golden Parachutes in California

The Bottom Line: Golden Parachutes Are Complex — Get the Structure Right

Hostile Work Environment in California: Legal Standard & Your Rights (2026)

Hostile Work Environment in California: How to Recognize It and What to Do

Claire Melehani

The Colloquial Meaning vs. the Legal Standard

The FEHA Legal Standard: What California Law Actually Requires

Protected Characteristics Under California FEHA

Bailey v. San Francisco District Attorney's Office (2024) 16 Cal.5th 611

What Qualifies, and What doesn't

How to Document a Hostile Work Environment in California

Your Hostile Work Environment Documentation Checklist

How to Take Action: Filing a Hostile Work Environment Claim in California

Frequently Asked Questions

The Bottom Line: The Legal Threshold Is Both Harder and Easier Than You Think

Not Sure If Your Workplace Situation Rises to a Legal Claim?

﻿

California’s WARN Act in the Age of Mass Layoffs

California’s WARN Act in the

Age of Mass Layoffs

SB 617’s New Notice Requirements, the Silicon Valley Workforce Reduction Wave,

and What California Practitioners Need to Know in 2026

Claire Melehani

I. Introduction: Why the Cal-WARN Act Commands Practitioner Attention in 2026

II. The Statutory Framework: Who Is Covered and What Is Required

Triggering Events

Notice Recipients

Remote Workers: A Critical Post-Pandemic Issue

PRACTICE POINTER — EMPLOYEE COUNTING

III. The 2026 SB 617 Amendments: New Mandatory Notice Content

IV. Cal-WARN vs. the Federal WARN Act: Why California Controls

V. The Penalty Structure: Back Pay, Lost Benefits, Civil Penalties, and Attorney’s Fees

Back Pay

Lost Benefits

Civil Penalty

Attorney’s Fees and the Fee-Shifting Asymmetry

Illustrative Exposure: 200-Employee Layoff, No Notice

The Severance Agreement Intersection: OWBPA and Waiver

VI. The Recognized Exceptions: Narrow, Employer-Borne, and Strictly Construed

1. Unforeseeable Business Circumstances

2. Natural Disaster

3. Physical Calamity or Act of War

PRACTICE POINTER — THE ABSENT EXCEPTION

VII. Identifying and Pursuing Cal-WARN Claims: A Practitioner’s Framework for Employee Representation

VIII. Employer Compliance in 2026: The SB 617 Pre-Layoff Checklist

IX. Conclusion: The Gap Between Template Compliance and Legal Compliance

Wage Theft in California: How to Recover Unpaid Wages (2026 Guide)

Wage Theft in California: Your Rights and How to Recover Unpaid Wages

Claire Melehani

$49.1M+

47,000

6×

What Is Wage Theft Under California Law?

Unpaid Overtime

Meal and Rest Break Violations

Off-the-Clock Work

Minimum Wage Violations

Unpaid Commissions and Bonuses

Employee Misclassification

How to Recover What You’re Owed

Golden Parachutes in California: What Executives and Employers Need to Know

Hostile Work Environment in California:
How to Recognize It and What to Do