The Real Players in Our Nation Are … – Recent Business, Contract, and Real Property Law Developments
Blog No 156
October 24, 2022
By Mack W. Borgen
Author (7 Books): The White Binder – Your Personal Data and Information Book (2022); The Writings of a Lifetime (2021); Dead Serious and Lighthearted – The Memorable Words of Modern America (Three Volumes) (2018-2019); and The Relevance of Reason – The Hard Facts and Real Data about the State of Current America (2 Volumes) (2013). As advertised in The New York Review of Books. Recipient of Eight National Book Awards
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The Real Players in Our Nation
The Need for More Corporate Economic Transparency in America
– Nobody Needs a Rant Right Now – This Is JUST an Idea –
Given accurate information, most Americans can assess and evaluate the import of such information. O.k., not all Americans, but “most.” However, getting that information remains an unnecessary challenge.
Certainly, there is plenty of garbage floating about the media — and especially the social media. And yes, America and some of our leaders have far too readily embraced a pathetic tolerance for “alternative facts,” “untruths,” and “misinformation.” Admittedly, reporting mistakes occur, bias is oftentimes a component of our news, and any data is vulnerable to varying analyses and interpretations. However, even in our not-so-simple world, facts can still be facts. And data can still be meaningful.
Since we are now immersed in the season of election tension, possibly it would be useful – even encouraging – to remember a couple simple observations about our democracy. As brilliant as our Constitution is; as hard as our government may work; and no matter how many elections are held …
Democracy, at its core, is based merely upon the belief that 51% of the people are right 51% of the time.
and
As “clumsy” as our democracy is — it is certainly better than any other alternative yet conceived or designed.
These are pretty low D-/51% standards, but they are still true. They are still important and sustaining for our democracy. Most of all, they suggest a need for tolerance and humility which is admittedly hard to find in our temporary know-it-all, blustery, conquer-style society.
But one manner by which America might start tempering its anger and regaining its self-confidence would be for there to simply be more transparency about our nation’s major corporations — because these corporations are important, because these corporations are some of the real players in our country. And mere data transparency would be useful on many levels. As we have all said to ourselves, “just give me the facts, and I’ll take it from there.”
Every month our government reports reams of data – from our nation’s inflation rate to the unemployment rate, from wage patterns to labor participation rates, and on and on. Such data is widely reported in the news. But similar or even remotely parallel data about our nation’s largest corporations is not readily available. Why?
The Data IS There!
A great deal of core economic data is calculated each month by such corporations – especially public corporations. But such data is rarely disclosed to the public or is deeply and intentionally buried in annual reports and filings. Would it not be useful for us, both as Americans and consumers, to have ready access to some of the basic, already-calculated monthly corporate data? Would not Americans have a better understanding of our own economy and some of its corporate participants if data was available — data about changes in corporate profits and profit margins, worker wages and employee turnover rates, the marginal federal corporate tax rates actually paid, gross receipts, and maybe even the amounts these corporations pay to lobbyists, political parties, and PACs?
This is particularly important because these corporations are some of the real players in our country. Their behavior and their successes and failures affect all aspects of our economy from the changes on the stock market to the health and welfare of workers, from the growth or diminishment of wealth disparity to the prospects for the future. Surprisingly, there are less than 7,500 public corporations in America, but they employ more than one-third of all non-farm workers in this country. It is not here suggested that their power be limited – merely that we Americans have a right and need to know – on a regular reporting basis – some basic facts about these massive public corporations.
Consider this in the context of our current inflation economy. Americans need to know the extent to which price increases are “real” — or are they merely a smokescreen and opportunistic pretext for increasing corporate prices and profits. For example, it is both relevant and unnerving, at least to this writer, that the corporate profits of the top six oil companies soared last year. Why is not such information routinely demanded and widely reported? The fact that our nation’s economy is at least 50% more concentrated now than it was just 15 years ago in 2005 (think Albertsons and Kroger), should be a matter of grave concern to all Americans.
Hell, We Know What Kim Kardashian Had for Dinner Last Night!
Think of it this way: We read reviews of every AirBnB we stay at. We track local restaurants and contractors on Yelp. We have access to every piece of minutiae data about the professional athletes in our country. We rate and compare the academics and even the food and dorms at our colleges. Hell, we know what Kim Kardashian had for dinner last night. Is it not time we have ready access to comparative information about America’s largest corporations – the truly Big and Real Players in our nation’s economy, health, and well-being?
More information would allow us to know – rather than speculate — about what is occurring. And, yes, as our thoughts about our economy influence our decisions about our political system. This is just another reason America needs enhanced reporting and more corporate transparency.
As always, this is offered just an idea. Now back to work.
Recent Business, Contract, and Real Estate Cases and Developments
General Sources: Daily or Periodic Judicial and Legislative Reports from various sources including the California Lawyers Association Daily Reports, the CLA’s Monthly Business Law News, and Announcements and Press Releases from the (California) State Attorney General’s Office.
- Employment Law – Important Pending Legislation. At the end of California’s recent legislative session, several particularly important employment laws were passed (pending action by Governor Newsom). Expanding legislation adopted two years ago which required employers with more than 100 employees, to report specific pay data annually, this legislation would (a) add civil penalties for failing to report such data and (b) require such data to be provided to job applicants. Another adopted bill would allow employees to leave work or refuse to show up it they feel “unsafe,” and it would prohibit employers from taking adverse action against such employees. The bill adopts a “reasonable belief” standard but specific does not include health pandemic within the definition of “emergency condition.” Lastly, legislation was adopted to assure employees the right to five (5) days “bereavement leave” upon the death of a family member and to take family leave for a “designated person” (defined to include a family member or one whose relationship with the employee is the “equivalent of a family relationship.” For the appropriate benefit of the employer, the employer may limit an employee to one designated person leave per 12-month period.
- Corporate Formations – Continued Selection of Delaware as the State of Incorporation. Approximately 68% of Fortune 500 companies are now incorporated in Delaware. This state-selection preference reflects a number of different factors: low franchise taxes, ease of filing, user-friendly online services, well-developed body of corporate law, judicial expertise in corporate law, and business-friendly laws. An example of Delaware’s corporate/management bias is the state’s recent (and rather absurd) statutory enactment whereby both corporate officers and directors are exempt from monetary damages arising even from breaches of fiduciary obligations. This was briefly discussed un my previous Blog No. 155, October 2, 2022. Even with these real or theoretical Delaware incorporation advantages, for small or moderate-sized corporations and especially for such non-public corporations, California, the local jurisdiction, is normally preferable (and more convenient). Note: Some persons still follow the tired, but rarely useful, practice of incorporating in Nevada – but this rarely creates any material advantages to the corporation.
- Real Property Law – Ground Leases – The Too Often Forgotten Use of Ground Leases. Reading the real estate market is nearly impossible. However, one thing is almost certain – the long-term increase in real estate value and the immediate utility of ground lease rents. In the buy/sell world of real estate, the use of ground leases is too often forgotten. A well-drafted ground lease, which is both a conveyance and a contractual agreement between the ground lessor and the ground lessee, can have extraordinary advantages to both parties. While there are many considerations to be considered (e.g., term, rental amount and periodic increases, subject provisions, financeability of improvements, use, and subordination, non-disturbance, and attornment provisions), ground leases should be seriously considered by any party contemplating selling their property – and especially if it is currently unimproved.
- Landlord-Tenant – Prohibition of “Self-Help Evictions” – Clarification of Distinctions between “At fault” Evictions and “No-Fault” Evictions. New California AG directives prohibit landlords from conducting unlawful lock outs and other “self-help evictions) (changing locks without court order, shutting off water or electricity). Furthermore, new California legislation generally prohibits a landlord from evicting most tenants without “just cause” except in the context of “no-fault” evictions such as then the owners wish to move into the property, remodeling that requires local permitting and which would take more than thirty (30) days, or, obviously, the intent to demolish toe unit.
- Employment Law – Minimization of “Quiet Quitting” – Steps for Employers to Take. With the growing use and abuse of quiet quitting whereby the employee refuses or delays in doing anything outside the boundaries of one’s job description and to avoid burdensome litigation, corporate employers should take certain steps to minimize the adverse impact of such quiet quitting. The three most commonly-identified steps are (a) to be precise (and arguably expansive) in defining one’s job description, (b) to conduct regular and routine performance reviews, and (c) to prepare and circulate detailed employee handbooks so as to define and articulate the employer’s expectation with respect to the employee’s work.
- Accurate Consumer Credit Reporting – Importance of Providing Accurate Information to Consumer Reporting Agencies. The recent case involving Hyundai (in which it was fined $19.2MM) underscores the importance of providing accurate information to consumer reporting agencies, Hyundai’s penalty imposed by the Bureau of Consumer Financial Protection was due to Hyundai failing to promptly update consumer information, failing to provide the date of first delinquency information, and failing to have reasonable identity theft and related blocking procedures. If such reporting is a component of one’s business, accurate reporting is critical and sometimes it is advantageous to have such reporting administered by retained third-parties with focused expertise.
- Trade Secrets and Noncompete Agreements. Once again, another state (this time Colorado) has narrowed the enforceability of trade secrets, nondisclosure, and non-solicitation agreements. These types of agreements can be critical for the protection of one’s business – especially as they relate to true corporate trade secrets and contain non-(employee-)raiding and customer non-solicitation provisions), they must be evermore carefully drafted in light of more and more jurisdictions, in effect, placing the burden of enforceability upon the corporation rather than the (former) employee. Too often such agreements are executed, placed in an employee file, and forgotten about. It is the recommendation of this author that they be routinely (e.g., once every 2-3 years) be reviewed and if necessary, amended and re-executed.
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