Welcome to the Law Offices of Chauvel & Glatt, LLP!
We are based in San Mateo, California, and serve the Peninsula and surrounding communities, as well as clients throughout Los Angeles, San Diego and San Bernardino Counties and the State of California. We’ve been providing legal services for more than 3 decades and specialize in the fields of Business Law, Real Estate Law, Employment Law, Estate Planning/Probate, Transportation Law, and Intellectual Property Law. We bring a wide range of knowledge and experience, with members of our team speaking English and Spanish.
Our attorneys enjoy working collaboratively and strive to keep matters as simple as possible. We share a desire to give you unparalleled customer service by being proactive and responsive to all your needs.
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Firm News
- Employee Misclassification, Employment Law, Independent Contractors
Posted in: News
California has some of the strictest worker classification laws in the country, and the passage of Assembly Bill 5 (AB 5) has only reinforced the state’s commitment to worker protections. For small and medium-sized businesses, ensuring compliance with these laws is crucial to avoid costly misclassification lawsuits, penalties, and regulatory scrutiny.
The distinction between an independent contractor and an employee is more than just a label—it determines whether a worker is entitled to labor protections, such as minimum wage, overtime pay, and benefits. Misclassification can result in severe consequences, including back wages, tax liabilities, and potential civil lawsuits. Let’s break down the laws regarding employment classification in California.
Understanding AB 5 and the ABC Test
AB 5, which took effect on January 1, 2020, codified the California Supreme Court’s landmark decision in Dynamex Operations West, Inc. v. Superior Court (2018). This decision significantly narrowed the circumstances under which a worker could be classified as an independent contractor. AB 5 introduced the ABC test, making it the default standard for determining worker classification.
The law was enacted to address concerns about companies misclassifying workers as independent contractors to avoid providing benefits, unemployment insurance, and workplace protections. While independent contractor arrangements can provide flexibility, they can also leave workers vulnerable to exploitation if improperly classified.
AB 5 has had a significant impact on various industries, including ride-hailing services, trucking, entertainment, and freelance work. While some businesses have successfully adapted, others have faced legal battles and significant financial penalties for misclassification.
The ABC Test: The Core of Worker Classification
AB 5 introduced the ABC test, which presumes that a worker is an employee unless the hiring entity can prove all three of the following conditions:
(A) The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract and in fact. This means the worker must be able to perform their work without significant oversight from the employer. If the business controls how, when, or where the worker performs their tasks, the worker is likely an employee.
(B) The worker performs work that is outside the usual course of the hiring entity’s business. This is the most challenging part of the test for many businesses. If the worker provides services that are integral to the company’s main business operations, they are likely an employee. For example, a bakery hiring a freelance cake decorator to design specialty cakes may fail this test because decorating cakes is part of the bakery’s core business.
(C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. The worker must be independently providing similar services to other businesses, not just working for one company. For instance, a freelance graphic designer with multiple clients and their own website or business license is more likely to qualify as an independent contractor.
Failing to satisfy any one of these prongs means the worker must be classified as an employee.
Overview of AB 2257 and Its Modifications to AB 5
The strict ABC standard led to unintended consequences, particularly for freelancers and gig workers. The passage of AB 2257 in September 2020 addressed these concerns by modifying the law to include additional exemptions and clarifications to AB 5.
While AB 5 still governs worker classification, AB 2257 created new exemptions, allowing more workers to be classified as independent contractors under a less restrictive test.
The exemptions under AB 2257 allow certain professionals and industries to bypass the ABC Test and instead be classified under the Borello Test—a more flexible standard that focuses on multiple factors, including the level of control a hiring entity has over a worker and whether the work is project-based. These exemptions include:
1. Freelance Writers and Journalists
AB 5 originally placed strict caps on freelance writers, limiting them to 35 submissions per client per year before they would have to be classified as employees. This caused major disruptions in the journalism and publishing industries.
How AB 2257 changed the law:
- The 35-submission cap was eliminated, allowing writers and journalists to freely contract without an arbitrary restriction.
- Freelance editors, copy editors, and content creators are also exempt, provided they have control over their work and do not replace regular employees.
- Independent photojournalists and videographers are exempt as long as they don’t shoot video content for scripted content like television shows or advertisements.
Industries Impacted:
- News agencies, magazines, and online publications.
- Freelance journalism, blogging, and editorial work.
- Content marketing and advertising industries.
2. Musicians and Performing Artists
AB 5 caused serious issues for musicians, bands, and performing artists, making it difficult for venues to book independent talent without the burden of classifying them as employees.
How AB 2257 changed the law:
- Musicians, composers, and songwriters can now work as independent contractors.
- Live performers, bands, and solo artists who perform original music at venues or private events are exempt.
- Recording artists and session musicians are covered under exemptions, allowing them to work with studios without being classified as employees.
- Event organizers and booking agents can hire musicians on a contract basis without violating AB 5.
Industries Impacted:
- Live entertainment and music venues.
- The recording industry and music production.
- Independent performers and artists.
3. Certain Business-to-Business Relationships
One of the biggest concerns with AB 5 was that it harmed small business owners and independent professionals who worked with other businesses on a contractual basis.
How AB 2257 changed the law:
- Expands the business-to-business exemption for independent contractors operating as sole proprietors or LLCs.
- Allows freelancers and independent businesses to work with companies without being classified as employees, as long as they control their work and pricing, they provide services directly to the hiring business, not its clients, and they maintain separate business locations and handle their own expenses.
Industries Impacted:
- Independent consultants and marketing professionals.
- Graphic designers, IT professionals, and web developers.
- Business services like bookkeeping, administrative support, and coaching.
4. Referral Agencies and Professional Services
AB 2257 provides clearer exemptions for referral agencies that connect clients with independent professionals for specialized services.
How AB 2257 changed the law:
- Referral agencies, such as those that connect customers with independent cleaners, dog walkers, or event planners, are exempt from AB 5 restrictions.
- However, the professionals they refer must meet specific independence requirements, including:
- Setting their own rates.
- Choosing their own clients.
- Providing their own tools and supplies.
Industries Impacted:
- Home services (cleaning, repair, moving).
- Personal services (tutors, dog walkers, fitness trainers).
- Consulting and professional networks.
How Exemptions Work and Additional Requirements for Businesses
While AB 2257 expanded exemptions, it did not eliminate all restrictions on independent contracting. Businesses and workers must still comply with California law when structuring their relationships.
1. Independent Contractors Must Meet the Borello Test
Even with an exemption from the ABC Test, workers must still satisfy the Borello factors, which examine:
- Who controls the manner and means of work.
- Whether the worker supplies their own tools and materials.
- Whether the worker has an independent business or offers services to multiple clients.
2. Contracts and Documentation Are Key
Businesses hiring independent contractors must have clear agreements in place outlining:
- The scope of work and payment terms.
- The independent nature of the relationship.
- Acknowledgment that the worker is responsible for their own expenses and taxes.
3. Industry-Specific Compliance May Still Apply
Even for exempt professions, businesses should check if other state or federal labor laws apply. Some industries, like transportation and healthcare, still face strict classification rules even after AB 2257.
How Small and Medium Employers Can Stay Compliant with California’s Independent Contractor Laws
Misclassifying employees as independent contractors can lead to serious legal and financial repercussions, including:
- Civil penalties and back wages: Businesses may be required to pay unpaid wages, benefits, and penalties for violating wage and hour laws.
- State audits and fines: The California Labor Commissioner’s Office and Employment Development Department (EDD) conduct audits that can lead to hefty penalties.
- Potential lawsuits: Workers can sue for misclassification, seeking damages for unpaid wages, denied benefits, and emotional distress.
- Tax liabilities: The IRS and state tax agencies may impose penalties for failure to withhold payroll taxes.
As a result, California’s strict independent contractor laws can present significant challenges for small and medium-sized businesses. Ensuring compliance with AB 5 and AB 2257 is critical to avoiding lawsuits, audits, and penalties. Below is a comprehensive guide on how companies can evaluate their workforce, properly classify workers, explore alternative staffing solutions, and defend against misclassification claims.
Evaluating Your Current Workforce
Before making any hiring or classification decisions, businesses should conduct a thorough assessment of their existing workforce to ensure compliance with California law.
Conducting an Internal Audit of Worker Classifications
A worker classification audit helps identify potential misclassification risks before legal issues arise. Employers should:
- Identify all independent contractors currently working for the company.
- Evaluate job duties to determine if workers meet the ABC test requirements.
- Review past hiring practices to ensure consistency in classification decisions.
- Consult with HR professionals or legal counsel if misclassification risks are identified.
If a worker fails any part of the ABC test, they may need to be reclassified as an employee.
Reviewing Contracts and Job Descriptions
Businesses should carefully review all contracts and job descriptions to ensure they align with independent contractor classification. This includes:
- Ensuring contracts clearly state that the worker is an independent contractor.
- Defining job duties to reflect independence—workers should not perform tasks central to the company’s core business.
- Avoiding language that suggests employer control over work schedules, methods, or supervision.
A properly structured contract alone does not determine independent contractor status—the actual work relationship must also meet legal requirements.
Assessing the Level of Control Over Independent Contractors
One of the most critical factors in classification is how much control the business exercises over the worker. To maintain independent contractor status:
- The worker should set their own hours and work schedule.
- They should use their own tools and equipment.
- They should work for multiple clients, not just one company.
- Payment should be structured per project, not on an hourly or salary basis.
If a business exerts too much control, the worker is likely an employee, even if they are labeled an independent contractor.
Best Practices for Properly Classifying Workers
If a worker qualifies as an independent contractor, businesses should take proactive steps to maintain compliance and minimize misclassification risks. To align with AB 5, businesses should:
- Clearly define independent contractor roles to ensure they fall outside the company’s usual business operations.
- Ensure contractors operate their own businesses and work with multiple clients.
- Limit oversight and control over how contractors complete their work.
- Avoid long-term contractor relationships that resemble employment.
While a written contract alone does not determine classification, it is an essential part of protecting a business. A strong independent contractor agreement should specify that the worker is an independent contractor, not an employee. It should also define project-based work rather than ongoing employment, ensure the contractor has the right to take on other clients and avoid clauses that impose excessive control over the worker’s tasks or schedule.
In addition, businesses should maintain detailed records to support independent contractor classification, including:
- Invoices from contractors showing project-based payment structures.
- Payment records proving that contractors were not paid hourly.
- Email communications demonstrating the worker’s independence.
- Proof of the worker’s separate business operations, such as websites or marketing materials.
Proper documentation is essential in defending against EDD audits or legal claims.
Defending Against Misclassification Claims
Suppose your business faces an EDD, IRS, or Labor Commissioner audit. In that case, it is crucial to seek legal guidance from an experienced employment law firm. A California employment law attorney from Chauvel & Glatt, LLP, can assist you during this process by:
- Reviewing worker classifications and ensuring compliance.
- Assisting in responding to audits and investigations.
- Developing a legal defense strategy against misclassification claims.
- Helping your business implement best practices to avoid future issues.
By taking proactive steps and seeking legal guidance, businesses can mitigate misclassification risks while maintaining workforce flexibility.
Take a Proactive Approach to California Employment Classification
Worker classification under California’s strict independent contractor laws is a complex and evolving issue. Small and medium-sized businesses must stay informed about AB 5, AB 2257, and the ABC test to avoid legal pitfalls.
By conducting proper workforce evaluations, maintaining clear contracts, and consulting legal professionals when necessary, employers can mitigate risks and ensure compliance. Given the high stakes of misclassification lawsuits, taking proactive steps now can prevent significant financial and legal consequences down the road. At Chauvel & Glatt, LLP, we pride ourselves on supporting businesses like yours with the complexities of independent contractor classification laws. Whether you are currently facing an audit or you want to implement best practices for employee classification, our employment law attorneys are available for a consultation. Schedule your appointment today to discuss your needs and discover more about how Chauvel & Glatt may be able to support your business.
- Employment Law, Hiring, Intellectual Property
Posted in: News
Trade secrets are the lifeblood of many businesses, driving innovation and providing a competitive edge in crowded marketplaces. From proprietary processes and formulas to client lists and marketing strategies, these intangible assets often determine a company’s success. However, the theft of trade secrets can have devastating effects, causing financial losses, reputational harm, and a weakened competitive position. While intellectual property (IP) laws provide a framework for protecting trade secrets, employment practices play a critical role in safeguarding this valuable information.
At Chauvel & Glatt, LLP, we understand that protecting trade secrets requires a proactive and comprehensive approach, particularly in the employment arena. By implementing well-crafted agreements, policies, and preventive strategies, businesses can minimize the risk of trade secret theft and ensure that they are prepared to respond effectively if a breach occurs.
The Importance of Trade Secret Protection in Employment Practices
Trade secrets are unique forms of IP that derive their value from being unknown to competitors. Unlike patents, trade secrets are not publicly disclosed, meaning their protection relies on maintaining confidentiality. Employment practices play a vital role in safeguarding these assets for several reasons:
1. Employees Are Key Holders of Confidential Information
Employees often work directly with sensitive information. Without proper safeguards, they may inadvertently or intentionally disclose trade secrets, especially during transitions such as hiring, promotions, or terminations. Strong employment practices ensure employees understand their responsibilities and the legal implications of misusing confidential information.
2. Maintaining Confidentiality Is Central to Trade Secret Protection
For information to qualify as a trade secret, businesses must demonstrate that they have taken reasonable steps to keep it confidential. Employment policies, such as confidentiality provisions, employee handbooks, and signed non-disclosure agreements (NDAs), serve as evidence of these efforts. Without these measures, it becomes difficult to claim legal protection in the event of a breach.
3. Mitigating the Risk of Departing Employees Taking Secrets
When employees leave, they might take valuable knowledge to a competitor or use it for personal gain. Employment agreements with confidentiality provisions and well-conducted exit interviews help mitigate this risk by clearly defining post-employment obligations and retrieving any company-owned property or materials.
4. Aligning Workforce Behavior with Legal Compliance
Educating employees about their obligations under trade secret and IP laws through training and communication fosters a culture of compliance. Employees who understand the importance of protecting this information are less likely to engage in actions that could expose the company to legal disputes.
5. Addressing Modern Challenges Like Remote Work
The rise of remote work and reliance on digital tools increase the risk of trade secret theft. Employment practices that include policies on acceptable use of technology, data security, and proper handling of company information ensure that trade secrets remain protected, even in a decentralized work environment.
6. Proactive Risk Management
Proactively managing risks through employment practices is far more cost-effective and efficient than dealing with trade secret theft after it occurs. Preventive measures reduce the likelihood of a breach and strengthen a company’s legal position should a dispute arise.
By embedding IP protection into employment practices, businesses can minimize vulnerabilities and demonstrate that they have taken reasonable steps to secure their valuable IP. This approach not only helps prevent theft but also positions the business to respond effectively in the event of a breach. Working with experienced employment attorneys ensures that these practices are tailored to the company’s unique needs and aligned with applicable laws.
Consequences of Poor IP Management Practices
Trade secret theft can have far-reaching consequences for businesses, particularly when critical proprietary information falls into the hands of competitors or unauthorized individuals. The damage caused by stolen IP goes beyond immediate financial loss and can have long-term implications for a company’s operations, reputation, and competitive position. Here’s how IP theft harms businesses:
1. Financial Loss
The most immediate impact is monetary. Competitors who acquire stolen trade secrets can replicate products, services, or processes without incurring the original research and development costs. This undermines the company’s ability to recover its investment and maintain profitability.
2. Loss of Competitive Advantage
Trade secrets are often the backbone of a company’s unique value proposition. When this information is stolen, the business may lose its edge, especially in competitive markets. For example, suppose a competitor gains access to proprietary technology or customer lists. In that case, it can erode market share and disrupt the company’s operations.
3. Reputational Damage
A company’s inability to safeguard sensitive information can harm its reputation among clients, partners, and investors. Customers may lose trust in the company’s ability to protect their data or interests, leading to a decline in business relationships.
4. Legal Costs
Proving trade secret theft and seeking legal remedies through litigation can be expensive and time-consuming. Businesses must demonstrate that the information was a trade secret, that reasonable measures were taken to protect it, and that it was misappropriated—all of which require significant legal resources.
5. Operational Disruptions
Dealing with the aftermath of intellectual property theft often diverts attention and resources from day-to-day operations. This distraction can lead to reduced productivity, delayed projects, and strained internal resources.
Risks and Vulnerabilities in the Employment Arena
The employment context presents several points of vulnerability where trade secrets are at risk. These risks often stem from employee behavior, inadequate policies, and modern work trends.
1. Onboarding New Employees
When hiring employees, especially those from competitors, there’s a risk they may bring trade secrets from their former employers. This could lead to unintentional misuse, exposing the new employer to legal disputes and complicating their operations.
2. Departing Employees
Employees leaving a company pose one of the greatest risks to trade secrets. Disgruntled or opportunistic employees may attempt to take client lists, proprietary strategies, or other confidential information to benefit themselves or their new employers.
3. Remote Work and Digital Access
The rise of remote work and reliance on digital tools has created new vulnerabilities. Employees may access sensitive information on personal devices or unsecured networks, increasing the risk of unauthorized sharing or accidental exposure.
4. Insider Threats
Not all intellectual property theft is external. Employees with legitimate access to sensitive information may intentionally or unintentionally misuse it. Insider threats are particularly challenging because they often involve trusted individuals who understand the value of the information.
5. Lack of Clear Policies
When businesses fail to implement clear and enforceable employment policies, employees may not understand their obligations regarding trade secret confidentiality. This lack of awareness increases the risk of inadvertent breaches.
6. Conflicts of Interest
Employees who work with or consult for competitors while still employed can create conflicts of interest that put trade secrets at risk. Without disclosure policies or conflict checks, these situations may go unnoticed until significant damage is done.
7. Poor Exit Procedures
Improper handling of employee offboarding can lead to the loss of sensitive information. If companies fail to collect company devices, deactivate accounts, or remind employees of their confidentiality obligations during exit interviews, trade secrets may leave with the departing worker.
Employment Strategies to Prevent Trade Secret Theft
Preventing stolen trade secrets requires a comprehensive employment strategy that integrates clear communication, legally enforceable agreements, and regular oversight. Below are key measures businesses should take:
1. Confidentiality Agreements and NDAs
Trade secret NDAs (non-disclosure agreements) are foundational tools for protecting sensitive information. These agreements should clearly define what constitutes a trade secret, specify the obligations of employees to protect that information, and outline penalties for breaches. Requiring NDAs during onboarding and for specific projects can ensure all employees understand their responsibilities.
2. Employment Agreements with Confidentiality Provisions
Beyond standalone NDAs, employment agreements should include trade secret confidentiality clauses. These provisions emphasize that the employee’s duty to protect sensitive information continues even after their employment ends. They should also outline the consequences of violating these terms, including potential legal action.
3. Employee Handbooks and Policies
A comprehensive employee handbook can reinforce trade secret confidentiality by outlining expectations for the handling of sensitive information. These handbooks should detail acceptable use policies for company devices, procedures for reporting potential breaches, and guidelines for remote work security.
4. Conflict of Interest Policies
Conflict of interest policies help prevent employees from engaging in activities that could compromise trade secrets. These policies should:
- Require employees to disclose outside work or consulting engagements.
- Prohibit working with competitors while employed.
- Include mechanisms to monitor and address conflicts of interest.
By identifying and addressing potential conflicts early, businesses can reduce the risk of employees sharing trade secrets with competitors.
5. Regular Training and Communication
Employees must understand the importance of trade secret protection and their role in safeguarding it. Training should cover:
- Identifying and protecting trade secrets.
- Proper use of technology and secure handling of information.
- Legal and ethical consequences of trade secret theft.
Regular training refreshes knowledge and fosters a culture of compliance.
6. Secure Remote Work Environments
With the rise of remote work, businesses must implement policies to ensure the security of intellectual property outside the office. Best practices include:
- Enforcing the use of secure company-approved devices and networks.
- Implementing encryption and multi-factor authentication for sensitive files.
- Providing training on data security and phishing risks.
7. Exit Interviews and Post-Employment Obligations
Exit interviews provide an opportunity to remind departing employees of their confidentiality obligations and retrieve company property, including devices and files. Businesses can also consider post-employment restrictive covenants, such as non-compete or non-solicitation agreements, where enforceable.
8. Use Post-Employment Restrictive Covenants Where Enforceable
Restrictive covenants such as non-compete and non-solicitation agreements can protect trade secrets after employment ends. While these agreements must comply with local laws, they can prevent former employees from working with competitors or soliciting clients using confidential information.
What to Do When Trade Secrets Are Stolen
Despite best efforts, trade secret theft can still occur. When it does, swift and decisive action is critical. Businesses should:
- Identify the Breach: Determine what information was accessed, how it was obtained, and by whom.
- Secure Evidence: Preserve emails, security logs, and other documentation that may be relevant in proving the theft.
- Seek Legal Counsel: Consult an experienced trade secret employment attorney to evaluate your options and develop a strategy for mitigating harm.
- Pursue Legal Remedies: Depending on the situation, this may include filing a lawsuit for trade secret misappropriation, seeking injunctive relief, or pursuing damages.
The Role of Chauvel & Glatt, LLP, in Trade Secret Protection
At Chauvel & Glatt, LLP, we specialize in helping businesses navigate the intersection of trade secret protection and employment law. Our team understands the importance of strong employment practices in safeguarding sensitive IP and minimizing risks. We work closely with clients to draft tailored agreements, develop comprehensive policies, and provide training to ensure their IP remains secure.
If theft occurs, we are prepared to act swiftly to protect your business through litigation, negotiation, or other legal remedies. With decades of experience in trade secret confidentiality and employment policies, we are committed to delivering practical and effective solutions that protect our clients’ most valuable assets.
Protecting Your Business’s Future
Trade secrets represent more than proprietary information—they are the foundation of your competitive advantage. By integrating strong employment practices with a proactive legal strategy, businesses can significantly reduce their risk of stolen trade secrets and ensure they are prepared to handle potential breaches.
If you’re ready to take the next step in protecting your trade secrets, contact Chauvel & Glatt, LLP to discuss your company’s concerns and start to plan for the future. Our experienced attorneys can provide the guidance and support you need to safeguard your business against threats and secure its future success.
The content of this blog is provided for informational purposes only and is not intended as legal advice. Every legal matter is unique, and the information presented here may not apply to your specific situation. Reading this blog does not create an attorney-client relationship between you and Chauvel & Glatt, LLP. For personalized legal assistance or advice, please contact a qualified attorney. If you would like to discuss your legal needs, we invite you to contact our office to schedule a consultation.
- Estate Planning
Posted in: News
The estate planning process offers a chance to plan post-death distributions (gifts) to individuals and organizations. Some individuals include more than just their children, grandchildren, schools, and charities in their distribution planning and identify other people who hold special significance in their lives.
In 2015, legendary University of North Carolina Men’s Basketball Coach Dean Smith passed away after a 36-year career mentoring and working with hundreds of young athletes. Upon his death, the trustee of his living trust revealed unique directions Smith wished to effectuate. He left instructions for his trustee to give each of his former players a $200 check with the message: “Enjoy a dinner out compliments of Coach Dean Smith.” Nearly 200 former players received the check with instructions. Coach Smith’s thoughtful gift was a touching gesture for many of his former players, but nobody was surprised by his detailed planning.
This story offers a good example of the opportunity to be creative and construct specific gifts within one’s estate plan that further a life’s legacy.
Working with an experienced estate planning attorney can help create fresh ideas and accomplish specific goals. Estate planning attorneys also assist in creating a proper and enforceable document that will allow a trustee to complete a desired plan. Unfortunately, a poorly crafted document can produce negative consequences which can frustrate a trustee and leave ambiguity, uncertainty, and financial disputes.
Recently, Chauvel & Glatt assisted a client tasked with the administration of a friend’s trust. The creator of the trust personally drafted the trust with an online software service, and included instructions to give $10,000 to “any person related to me through 23 and Me,” the genetic ancestry matching company. This trust instruction created numerous potential problems for the trustee.
There was no record the creator had ever completed the 23 and Me process, and there is no procedure to do a post-death analysis. Additionally, such an open-ended instruction with an unlimited, unnamed group of potential recipients could have more than exhausted the estate funds and cause disputes. Often these types of distributions have priority over what may constitute the residual estate distribution.
The opportunity to leave specific gifts to people that you wish to honor or remember is a compelling option, but one to be taken with care and consideration. Contact the Estate Planning Attorneys at Chauvel & Glatt to establish or update documents and properly create the legacy you wish.
This material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute legal advice. For information on your particular circumstances, please contact Chauvel & Glatt at 650-881-2476 for legal assistance near you. (photo credit: Depositphotos.com)