There are two common legal consequences of a business and a spouse who both work at the same company. The first is “fault and desertion.” Under California Civil Code Section 1366, if a business owner or employee does not comply with an oral or written promise to serve as counsel or representation, this results in a conflict of interest between the business and the employee. If the employer knows or believes that the employee intends to desert the company, this will likely be reason enough for the employee to refuse to serve as counsel. The employer must also give the employee notice that he/she is being forced to serve counsel or representation. This gives the employee a reasonable opportunity to realize how losing the position could affect the ability to pay child support or other financial obligations.
“Discretionary desertion” occurs when an employee decides to quit the company without just cause. Courts have held that a business is not held liable for desertion by an employee who has more than one job because there is a conflict of interest between the employer and the employee. A judge may impose discipline against an employer if he/she discovers that an employee has given up his/her job so that they can avoid serving court orders.
Another legal consequence is “contingency.” This refers to the potential for divorce after a marriage occurs. For example, if one spouse files for divorce, then the surviving spouse is often allowed to work out an uncontested divorce if the marriage ends amicably. The spouse who files for divorce is presumed to have suffered a substantial loss.
A business can have an employee serve as its spouse while working at the same time. However, this situation is considered uncommon because an employee would likely receive a wage lower than his/her spouse. For this reason, most business owners hire an attorney who practices in the state where the business operates. An attorney who practices exclusively in the state where the business is based usually has greater experience working with businesses than an attorney who practices in other states.
In some cases, the business and the spouse do not end up divorcing in the end. An owner may decide to “divorce” his/her spouse to find out that the couple has re-established themselves as married. This happens very seldom, but it does happen. When a business owner “marries the love of his/her life” and then realizes that the employee will continue to work for the company, the decision to divorce the business and spouse is not necessarily unjustified. The employee may have actually benefited from being kept in the employment.
One legal consequence of a business and a spouse splitting up is that each party’s debts may be paid in full by either party. If the relationship between the spouse and the business owner was amicable before the marriage, the court might order one of the spouses to pay the other spouse’s debts. For example, if the spouse agreed to sell the business before marriage, the courts may order the seller to pay back the money he/she received. If the parties are not amicable, the courts can order one of the spouses to pay the costs of the sale. This payment of costs is referred to in the context of spousal support, which is often the case if a court orders one of the spouses to pay spousal support to the other spouse.
Another situation commonly found where a business and a spouse separate are where the spouse files for bankruptcy protection and the business closes. Even though the business may have closed down for a reason, the court will order the closing down to avoid having the stigma of bankruptcy on one’s name. In some states, a bankrupt person is not allowed to operate a business. The court also has the authority to prevent a bankrupt person from being able to purchase real estate. If a bankruptcy situation arises, the other spouse may be able to continue making payments to the other spouse on an installment basis rather than receive a lump sum payment.
DifFERence between a business and a spouse is not always easy to prove. In the past, a simple divorce would suffice in cases of separation. Still, the advent of the Internet and other forms of filing documents makes it more difficult to prove a case of separation without a real estate transaction or other supporting documentation. The parties involved in a divorce must agree on the terms of their separation and divorce or face the possibility of lawsuits over the terms of the separation and divorce. Courts do try to be fair in their procedures, however. Because of the computerization of the filing process, it is almost impossible to obtain proof of separation without some supporting documentation. This type of documentation can include home and property insurance policies, bank and brokerage statements, tax returns, letters, or other written communications from either spouse and court orders for child custody and visitation.