Friday, June 29, 2012

Employee Commission Agreements Need to be in Writing Soon

It’s tough to think about New Year’s Day on the 4th of July, but January 1, 2013 is a date that nearly all California employers need to focus on.  By that date, and in accordance with California Labor Code §2751, all employee commission plans must be reduced to writing.  This means handshake deals for sales people are no longer permissible, and employees must receive written notice of how their commissions are computed and paid.  Employer and employee should each sign the contract.        

Don’t wait until the last minute.   It’s always important for employer and employee to have a clear written understanding of how wages are calculated.  Now is the time to review any existing written agreements to ensure that they comply with the law.  If you are still relying on oral understandings, now is also the time to put the signed written agreement in place.   

With extra attention being paid to commissioned employees next year, government agencies and employee representatives will likely focus on two related issues as well: 

1) Has the sales person been misclassified as an independent contractor instead of an employee? and

2) Has the sales person been properly classified as exempt from the overtime requirements under federal and state law?

While the risks under Labor Code §2751 may be relatively slim, the damages for misclassification are steep and continue to build year after year.  Don’t wait for the holiday season to arrive; act now to get your sales force wage and hour practices in order.

For more information or legal guidance related to written commission agreements and the proper classification of sales people contact Jennifer Phillips ( or Greg Walsh ( in the firm’s employment department.

Wednesday, June 27, 2012

New Legislation to Help California Grapegrowers Collect

To be a winegrape buyer you have to get a processors license from the California Department of Food and Agriculture’s market Enforcement Branch (the “MEB”).  When a buyer doesn’t pay for the grapes though, the seller can resort to a lawsuit or the seller can file a complaint with the MEB under the Processors Law. (Cal. Food & Ag. Code Sections 55521 et seq.)  Under the Processors Law the MEB’s hammer has been the suspension or revocation of a winery’s processors license.  Pay the grower what is owed or MEB may shut down your processors license, rendering a defaulting buyer technically unable to make or sell wine.

That may sound simple enough, and the hammer is very real, but the punishment exacted may not be proportionate to the harm done.  Suspending or revoking a processors’ license, even temporarily, may not actually get the grower paid quickly, and has actually had the result of some defaulting buyers simply ignoring the MEB’s decision unless and until they can afford to pay.  A few wineries have just shut down instead of paying, the MEB’s suspension being the last straw.   

Through AB 907, Assembly Speaker pro Tempore Fiona Ma has proposed changes to the Processors Law that would give the MEB greater latitude to fashion remedies through fines and assessments of administrative costs against wineries that don’t pay their growers.  The fines would be up to $10,000, and the recovery of administrative costs would be assessable up to $6,000. Another key amendment proposed by AB 907 is allowing the MEB to require a winery that has had problems paying its growers to put up a surety bond in order to keep its license.  Currently, the MEB can only require a guaranty of payment from a processors’ license applicant, with the recession teaching too many creditors the hard lesson that guaranties are not always worth the paper they are written on.  Posting a surety bond is a pretty simple arrow, and a cost-effective one, to add to the MEB’s quiver, and one that is common in many other industries. 

While grower organizations are in favor of AB 907, winery organizations are tepid toward it.  But, there really hasn’t been a hue and cry about AB 907, which may be because winery organizations don’t want to waste capital at the Capitol on something that really will only affect a relative handful of grape buyers anyway. 

AB 907 is currently referred to the Senate Agriculture Committee for further deliberation.  We’ll keep apprised as AB 907 goes through volatizing.

For further information on business law matters, including grape purchase contracts, contact Scott Greenwood-Meinert at 

Thursday, June 21, 2012

TTB Rule Changes for Documentation Supporting Organic Claims

The Alcohol and Tobacco Tax and Trade Bureau (TTB) recently announced changes to the supporting documentation required for claims that alcohol products are “100% Organic,” “Organic” and/or “Made with Organic” ingredients.  Currently, industry members submitting a Certificate of Label Approval (COLA) application for alcohol products that include such organic claims must submit: (1) the organic certificate for the handling operation that makes the finished product; and, (2) the Accredited Certifying Agent’s (ACA) preview which contains the actual images of the product label and the stamp or signature of the certifying agent or control body/authority.   Under TTB’s new rule, a copy of the organic certificate is no longer required for products including any such “organic” claims, although COLA application must still include the ACA preview.  It should be noted, however, that for any labels that identify organic contents in an ingredient statement, organic certificates for each ingredient identified as organic must still be submitted with the COLA application.

For assistance with COLAs or more information about the TTB labeling changes discussed above, please contact Bahaneh Hobel at

Tuesday, June 19, 2012

Update on North Coast Frost Protection Rules

In February, we reported that regulations slated to be enforced against grape growers in the Russian River watershed during the frost protection season had been postponed pending court action on a legal dispute over their legitimacy.  We’ve been monitoring that case and wanted to provide readers an update as to status.  Currently, the case is scheduled to be heard starting June 28 in the Mendocino Superior Court, following several delays.  We’ll keep you posted on the outcome of the hearing as soon as it’s available. 

For more information on the legislation or assistance with other grower issues, please contact Caroline Boller at