Recent California Legal/Business Developments – Quick Facts-Young People-U.S. Religiosity-Women in Power
Blog No. 173
October 3, 2023
Reading Time: 12 Minutes
By Mack W. Borgen
2024 Listee – Who’s Who in America; University of California at Berkeley (Honors, Economics); Harvard Law School; National Award-Winning Author.
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Quick Facts
Many More Young Adults Now Living at Home
Reflecting the tricky (and evermore expensive) world in which we live, about 45% of young adults (ages 18-29) are now saving or sharing rent by living with family.
This is a radical shift in living demographics, but it also reflects the substantial increases in our general cost of living and especially the exorbitant increases in urban area rents and house prices – even modest home prices.
Top 10 States for Young Workers to Find Jobs, Live (Relatively) Affordably, and Have Fun
All “listing studies” are to a degree suspect and subjective, however a recent study examined employment rates, financial considerations (such as median household income), and lifestyle priorities ranging from the quality and cost of health care and the availability of restaurants, bars, museums, and movie theatres. Based upon those multiple factors, one study concluded that the following ten (10) states offered young workers the best possibilities for good employment, affordable living, and fun amenities.
- Massachusetts
- Rhode Island
- New Hampshire
- Maryland
- Connecticut
- Vermont
- Washington
- Minnesota
- New Jersey
- Oregon
Obviously, New England (and to a lesser extent the Pacific Northwest) “win.” There is no need to pack right away – but interesting.
American Religiosity and Spirituality
Gallup first attempted to measure the level of America’s religiosity and spirituality 24 years ago, in 1999. Recently, Gallup sought to again measure America’s “religiosity.”
In response to a series of questions, Gallup found that 47% of Americans described themselves as “religious,” and another 33% identified themselves as “spiritual but not religious.” Thus, fully 80% of Americans consider themselves “religious,” but two observations can still be made by comparing the 2023 data with the 1999 data, First, the nearly 20% of Americans who are neither religious nor spiritual has doubled in these 23 years, and possibly more significantly, the number of people who identify as “religious” has declined by 7% (extrapolated to the full U.S, population, that would be about another 23,100,000 Americans).
(Many) More Women in Positions of Power
After literally centuries, more and more women are assuming positions of power in the U.S. Set forth below is the summary data regarding the number and percentages of such women holding certain seats of power.
Women in U.S. Senate: 25% (25 Women) (16 Democrats and nine Republicans).
Women in House of Representatives: 28% of voting membership (91 Democrats and 33 Republicans).
State Legislatures: 29.9% of state senate seats and 33.7% of state house or assembly seats. (Note: In 2019, Nevada became the first state with a majority-women state legislature – Currently 62% majority). West Virginia was the state with the lowest percentage, at 11.9%).
Governors: 24% (Eight Democratic and four Republicans women governors).
Cabinet-Level Positions: 48% (12 women out of the 25 positions designated as Cabinet or Cabinet-level).
Fortune 500 CEOs: 10.6% (with 53 women heading major firms).
Fortune 500 Board Members: 30.4% (increased from a mere 9.6 percent about 30 years ago in 1995).
College and University Presidents: 32.8% (A tripling in the last appr. 40 years).
Source: Schaeffer, E., “The Data on Women Leaders,” Pew Research Center, September 23, 2023.
Recent Business and Real Estate Law Developments
Real Estate Law – Types of Guarantees in Commercial Leases
It is common for commercial landlords to require that a guarantor secure the obligations and liabilities of a tenant. This is especially true since frequently the commercial tenant is itself a “shell” limited liability company or corporation formed solely for the leasing of the subject space and the engaging of a business at the subject commercial site.
Therefore, it is now almost routine for commercial landlords to require either a personal or a corporate guaranty from a third-party to secure a tenant’s obligations under the lease. However, there are several different types of commercial lease guaranties. These types of lease guaranties fall generally into one of the following types:
- Full or Absolute Guaranty. This type of “gold standard” guaranty requires the guarantor to cover all of the tenant’s obligations under the lease – including both monetary obligations (e.g., rent, operating expenses and utility charges) and non-monetary obligations (e.g., maintenance of insurance coverage, repairs, licenses and permits).
- Partial or Limited Guaranty. This type of lease guaranty may be limited to just a tenant’s monetary obligations under the lease or may, for example, may be capped at a specific dollar amount. Note also that a guaranty may start as a “full guaranty” and then transition into a partial guaranty after a designated period of time.
- Springing or Bad Acts Guaranty. This is actually a type of partial guaranty. This type of guaranty only becomes enforceable upon the occurrence of a specified event. The triggering event may be the filing of bankruptcy by the tenant or the discovery of a tenant’s bad act such as the commission of fraud or the tenant’s damages to the premises.
- Good Guy Guaranty. Under this type of guaranty, the guarantor’s liability ceases upon the tenant’s vacation of the premises or after some reasonable advance notice of such intended vacation of the premises. There are, however, multiple variations of this type of limited guaranty. For example, the guarantor’s obligations may extend to reimbursing the landlord for the cost of restoring the premises, removing the tenant’s “improvements” to the space, or even assuring the full payment of lease brokerage commissions.
As noted above, especially because the tenant is oftentimes a space-specific LLC or corporation, the obtaining of personal or entity guaranties is oftentimes one of the most important aspects of commercial leasing.
California Strengthens Prohibitions Against Non-Competition (and Non-Solicitation) Agreements
Citing the need for employee mobility and open competition, California has again – by the addition of Section 16600.5 of the Business and Professions Code — strengthened the prohibition against the use of almost any form of non-competition agreements. Subject to some very narrow prohibitions, such agreements are null and void and effective January 1, 2024, they will be unenforceable – regardless of when or where they were signed and regardless of where the employee works (inside or outside of the state).
Possibly as significant is that employees and former employees can now bring private rights of action for both injunctive relief and/or actual damages (and the right to attorneys’ fees and costs) to enforce this prohibition.
It is frequently overlooked that California courts have also de facto expanded this prohibition to include post-employment customer non-solicitation provisions and even employee non-solicitation prohibitions.
Some would argue that possibly these prohibitions can be avoided by using a non-California choice of law provision if the employee has been represented by independent counsel when negotiating the employee’s employment agreement. However, this author believes that it is, at best, a risk to rely upon this possible exemption.
This author also believes that the courts may – and should – distinguish between the application of restraints during one’s employment vis-a-vis after one’s employment. However, even in these instances, the clear direction and seeming intent of these law is to fully ban the enforceability of these types of agreements.
California Enacts Powerful Legislation Adding Significant Climate-Related Disclosure Requirements for Many Corporations
In September, California passed two pieces of legislation which will usher in significant climate-related disclosure requirements for thousands of U.S. public and private companies which do business in California. These are unquestionably the most extensive emissions- and climate-disclosure laws enacted in the U.S., and these will be the first mandatory climate-related risk disclosure laws in the U.S.
While they only relate to large companies, it is estimated that as many as 10,000 or more companies will need to commence such disclosure compliance. Companies with more than $1.0BB in annual revenues must file extensive emissions- and climate-disclosures annually. Significantly, these disclosures must be verified by qualified, independent third-parties. Starting in January 2026, companies with $500MM in annual revenues also will need to file biennial disclosure reports.
This legislation is largely due to the impacts of climate change which have impacted California – such as wildfires, sea-level rise, extreme weather events, and extreme droughts. While there is still a small of community of Americans who elect to ignore or deny climate change, it cannot be ignored that the last year alone there were 23 separate billion-dollar climate/weather-related disasters in the U.S. alone.
Surprisingly, there is buried in the legislation an insultingly mild penalty for noncompliance. It appears that that companies which do not timely file such disclosure reports would be subject to only an administrative remedy of “up to $50,000.” While it is almost likely that more legislative and regulatory actions will be permitted, this non-compliance fine is at this time relatively small.
The underlying theme of these new climate-impact disclosure requirements is transparency for policy makers, investors, and shareholders. However, it is the opinion of this author that despite the certain value of such data assemblage and disclosure, some far more aggressive steps will have to be eventually taken to minimize the adverse impacts of greenhouse gas emissions and other climate-impacting matters.
A Quick Thought for the Week
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