Perspectives

Compliance Best Practices, Prohibited Conduct, and the High Cost of Getting It Wrong

In Part 1, we explained the key changes brought by California’s SB 1286, including which debts and debtors are now covered, the new notice requirements, how to respond to debtor requests, and how to handle identity theft claims.

In Part 2, we’ll cover the next critical pieces:

• What conduct is now prohibited
• What information you should have at intake
• Practical compliance recommendations
• Legal gray areas
• And the risks of noncompliance under Rosenthal

Let’s get into it.

Prohibited Conduct Under Rosenthal (As Amended by SB 1286)

SB 1286 reinforces and expands the types of conduct debt collectors must avoid when collecting covered debt. Violations-even if unintentional-can lead to serious legal consequences.

Prohibited actions include:

• Threatening or harssing language
• False or misleading statements
• Obscene or profane language
• Calling excessively or at unreasonable times
• Communicating with third parties, including employers
• Adding unauthorized fees or interest
• Collecting time-barred debt without proper disclosures
• Recording phone calls without the debtor’s consent
• Abuse of legal process (e.g., improper lawsuits)
• Failing to provide required disclosures

WFJ Tip: Follow Regulation F guidelines under the FDCPA to remain in compliance:

• “No more than 7 calls in 7 days”
• “No more than 1 live conversation within that timeframe”
• “Contact only between 8 am and 9 pm (debtor’s local time)”
• “Don’t send emails or texts at odd hours-or if the debtor says it’s inconvenient”
• “If the debtor asks you to stop contacting them-stop”

What to Have Ready at Intake

Before starting collection efforts, make sure your file includes:

• A copy of the contract, if one exists
• If no contract, all documents that support the existence of the debt
• For credit accounts, the most recent statement showing the last purchase or payment

Being prepared upfront can help you comply quickly if the debtor makes a written request-and reduce the risk of having to stop collection midstream.

Compliance Recommendations from WFJ

To stay ahead of the July 1, 2025 enforcement date, we recommend making the following updates:

Update Your Process

• Implement a system to track written requests and disputes
• Update phone scripts, letters, and templates with new required language

Review Your Intake and Documentation Procedures

• Require all supporting documents from creditors efore initiating collection
• Confirm that charges like interest, late fees, and penalties are clearly documented.

Educate Your Clients

• Make sure your clietns understand what information is required
• Share the updated procedures and expectations

Train Your Team

• Create or update training programs for staff
• Emphasize communication do’s and don’ts under Rosenthal

Conduct Regular Internal Audits

• Tailor the frequency to your organization’s size, volume, and past audit results
• Use audits to ensure compliance across all active accounts

Legal Gray Areas to Watch

Some parts of SB 1286 leave unanswered questions. Until further legal guidance or case law emerges, WFJ recommends erring on the side of caution.

Are Sole Proprietors Covered?

Likely, yes. Treat them like individual guarantors.

Is Real Estate-Secured Debt Covered?

Probably. Best to treat it as covered unless clearly executed.

Where Can You File Suit?

Even if there is a contractual venue clause, Rosenthal may require you to sue in:

• The ounty where the debtor currently lives
• The county where the debt was incurred
• The county where the debtor lived when the debt was incurred

WFJ Recommendation: Until these gray areas are litigated, assume coverage. Treating a debt as if it’s covered does not make it covered, but failing to do so when it could cost you.

The Cost of Noncompliance

California has an active consumer litigation bar-and SB 1286 is likely to increase enforcement and lawsuits. If you violate Rosenthal (even unintentionally), the consequences can be serious:

• Costly legal defense
• Settlements
• Attorney’s fees awarded to the debtor
• Ongoing litigation exposure

Remember, Rosenthal is a strict liability statute. That means intent doesn’t matter in most cases. The only real defense is the bona fide error defense, which requires proof that your procedures were designed to prevent the mistake.

Final Thoughts from WFJ

The best protection is preparation. Here’s what you can do now:

• Update your processes before the law takes effect
• Train your staff and inform your clients
• Conduct audits and stay ahead of compliance risks
• When in doubt, treat the debt as covered
• Work with experienced counsel to develop compliant systems

A Friendly Legal Reminder from WFJ

This blog is for educational purposes only and does not constitute legal advice. For guidance on how SB 1286 applies to your organization, consult with an attorney experienced in debt collection and Rosenthal compliance.

California’s SB 1286, effective July 1, 2025, expands the Rosenthal Fair Debt Collection Practices Act to include certain commercial debts. For businesses and law firms involved in debt collection, understanding these changes is critical to staying compliant and avoiding costly legal issues.

Which Debts Are Covered?

SB 1286 appies to “Covered Commercial Debt” or “Covered Commercial Credit” entered into, renewed, sold, or assigned on or after July 1, 2025.

A debt is considered covered if:

• It is owed by a natural person (not an LLC or corporation)
• The cummulative debt is $500,000 or less
• The debtor is either the primary obligor or a guarantor of a covered commercial debt

Covered debt can include money owed to:

• Lenders
• Commercial financing providers
• Debt buyers

In short, individual guarantors of commercial debt are now protected under Rosenthal if the debt is $500,000 or less.

Who Must Comply?

SB 1286 applies to:

• Original creditors
• Assigneeds
• Debt buyers
• Collection agencies
• Law firms regularly engaged in debt collection

Notice Requirements

Debt collectors must provide a specific notice in their first written communication with a debtor. This notice must clearly explain the debtor’s right to request records that include:

• Authorization to collect the debt
• The debt balance, including interest and fees
• Dates of delinquency or last payment
• Creditor name and account number
• Debtor’s last known address from the creditor’s records
• Names and addresses of any other parties that debt was assigned to

If the debt arises from an oral contract in a language other than English, the notice must be provided in that language. Additionally, if the collector primarily used a non-English language during the initial contact, the written notice must be delivered in that language within 5 business days.

Responding to Written Requests

If a debtor submits a written request for more information, collectors must provide:

• Proof of authority to collect the debt
• A breakdown of the debt balance, interest, and fees
• Dates of delinquency or last payment
• Creditor name, address, and account number
• Debtor’s last known address
• Names and addresses of any other assignees
• Debt collector’s California license number, if applicable

This information must be provided within 30 calendar days, and if it cannot be produced within that timeframe, all collection activity must stop until it is available.

| WFJ recommends treating any dispute or request for additional information as a formal “written request” to ensure compliance.

Identity Theft Claims

If a debtor claims identity theft, whether orally, in writing, or via police/FTC report, all collection activity must stop until a good faith determination is made that the debtor is responsible for the debt.

If collection continues, the debtor must be notified of the results of the investigation. If reporting to credit bureaus, any account under investigation must be removed if collection ceases.

Up Next: Part 2- Compliance, Conduct, and Consequences. Stay tuned for Part 2, where we will break down the steps you should take now to comply and protect your organization from risk.

Estate planning is the process of organizing your legal and financial affairs so that your wishes are honored in the event of your death or incapacity. Many people delay it, thinking they don’t have “enough” assets, that it can wait. But the truth is, if you have anything of value or people who depend on you, you need an estate plan.

Your estate includes everything you own; real estate, bank accounts, retirement plans, personal property, life insurance policies, and even your interest in a business. Without a will or other planning tools in place, state law-not you-determines how these assets are distributed. This process, known as intestate succession, often leaves families with unnecessary stress, delays, and disputes.

An estate plan allow you to:

• Name a guardian for minor children
• Designate someone to make healthcare and financial decisions if you are unable to do so
• Direct how your assets should be distribured
• Avoid or minimize probate and potential estate taxes
• Protect loved ones with special needs or complex family dynamics

Common planning tools include:

• Powers of Attorney
• Healthcare Directives
• Beneficiary Designations
• Wills
• Living Trusts

WFJ and LegalShield makes the process easier by offering a Will Questionnaire (find ours here) and direct access to the attorneys at Wagner, Falconer & Judd. You don’t have to navigate this alone.

Estate planning is not just about death-it’s about protecting your future. Start today to ensure your voice is heard when it matters most.

Minnesota’s Paid Family and Medical Leave (PFML) program is rolling out in 2026, but employers should start preparing now. One of the first steps in ensuring compliance is understanding who is eligible for leave under the new law. Here’s a breakdown of the questions we are getting at the Compliance Center related to employee eligibility that every MN employer needs to know.

Who is eligible to receive MN Paid Leave?

Nearly every employee working in Minnesota-including full-time, part-time, temporary, and most season workers, is eligible for PFML benefits. This includes company owners and corporate officers, who are required to participate in the program.

However, there are a few exceptions PFML does not apply to:

• Independent contractors
• Self-employed individuals (unless they opt in)
• Tribal Nations (unless they opt in)
• Federal government employees
• Railroad employees
• Certain seasonal hospitality workers (see below)

Is there a minimum hours or length-of-employment requirement?

No. Unlike some leave laws, MN Paid Leave does not require employees to work a specific number of hours or months before becoming eligible. Instead, employees must meet both of the following conditions:

• Earn at least 5.3% of the statewide average annual wage, which amounts to $3,700 in 2024, and

One of the following:

• Worked at least 50% of their time in Minnesota during a calendar year, or
• If no state accounts for at least 50% of their work time:
• Performed some work in Minnesota
• Lived in Minnesota for at least 50% of their time during a calendar year

When does job protection under PFML begin?

Job protection begins after 90 calendar days of employment. Once eligible, employees who take leave are entitled to return to their previous role-or an equivalent position-with the same pay, benefits, and working conditions.

Even if an employee’s position is filled or restructured during their leave, they must still be reinstated unless the employer can prove that the employee would not have remained employed regardless of the leave (such as during a legitimate layoff or business closure).

Are corporate officers or business owners eligible?

Yes. Even though they many not consider themselves “employees” in the traditional sense, company owners and officers must participate and are eligible for PFML benefits if they meet the earnings and residency/work location criteria.

Are first responders and government officials eligible?

Generally, yes. Municipalities and local government entities are required to participate in the PFML program. This means first responders, as well as elected or appointed city and state officials, are likely eligible-provided they meet the wage and work/residency requirements.

What about seasonal employees?

Most seasonal employees are covered, but there’s a specific exception for certian workers in the hospitality industry. These employees are excluded if they:

• Work 150 days or less within any 52-week period, and
• Work for an employer whose average receipts during any 6-month period fall below a certain threshold (typically defined for hospitality sector employers.)

Employers with seasonal workers in the hospitality industry should work with legal counsel to determines whether their business qualifies for this exclusion.

Bottom Line for Employers

Minnesota’s Paid Family and Medical Leave program is broad in scope and applies to most employees in the state. Employers should assess their workforce now, understand which team members are covered, and begin planning for compliance in 2026.

Have questions about your responsibilities under PFML? The employment attorneys at Wagner, Falconer & Judd are here to help you prepare your business for a smooth transition.

Many people think of a Healthcare Directive as something only older adults or people with serious illnesses need. In reality, it’s an important document for everyone over the age of 18-including healthy, active individuals. Life can change in an instant, and having your health care wishes documented ensures that your voice is heard, even if you can’t speak for yourself.

A Health Care Directive (sometimes called an “advance directive” or “living will”) gives you the power to:

• Name a trusted person to make health care decisions on your behalf if you’re unable to do so.
• Provide instructions about the types of medical care you want or do not want.
• Reduce family stress and conflict during medical crises by providing clear guidance.

Why It Matters-Even for the Healthy

Emergencies don’t discriminate. A car accident, sudden illness, or unexpected surgery could leave you unable to communicate. Without a directive:

• Doctors must rely on state law to determine who makes decisions-which may not align with your preferences.
• Family members may feel pressured to make life-altering choices without knowing your wishes.
• Disagreements among loved ones can cause emotional strain at an already difficult time.

Having a directive in place is a gift to your family-it removes uncertainty and gives them the confidence that they’re honoring your decisions.

Information You’ll Need to Get Started

Creating a Health Care Directive is simpler than many people think. Before you begin, gather:

Your Health Care Agent’s Information

• Name, contact information, and relationship to you.
• Consider choosing an alternate agent in case your first choice is unavailable.

Your Care Preferences

• Do you want all life-sustaining treatments if there’s little chance of recovery?
• Are there specific treatments or interventions you want to refuse (e.g., feeding tubes, ventilators)?
• Your wishes regarding pain management, organ donation, and end-of-life care.

Your Personal Values

• Religious, cultural, or personal beliefs that should guide your care.
• Quality-of-life considerations-what makes life meaningful to you?

Medical Information

Current medical conditions, allergies, and medications.

Key Terms to Know

Health Care Agent (Proxy, Surrogate)– The person you name to make health care decisions for you if you cannot communicate.

Living Will-The part of a directive that outlines your medical treatment preferences.

Do Not Resuscitate (DNR) Order-A medical order indicating you do not want CPR if your heart stops.

Life-Sustaining Treatment-Medical procedures that prolong life but may not cure your condition (e.g., ventilators, dialysis).

Palliative Care-Comfort-focused care aimed at relieving symptoms, not curing illness.

Advance Directive-An umbrella term that can include a Health Care Directive, Living Will, and other instructions about about future medical care.

Case Study: Planning Ahead Plays Off

Maria’s Story

Maria, a healthy 32-year-old, was an avid runner with no medical issues. During a vacation, she was in a car accident that left her unconscious for several days. Because she had completed a Health Care Directive the year before, her designated health care agent-her sister-could immediately make decisions based on Maria’s clearly written wishes.

• Her directive stated she did not want prolonged life support without a reasonable chance of recovery.
• Her sister was able to communicate this to the doctors, avoiding family disagreements and ensuring Maria’s wishes were honored.

Maria recovered, but her family later reflected that the directive removed an immense burden during an incredibly stressful time.

Final Thoughts

A Health Care Directive is not just for those who are ill-it’s for anyone who wants control over their medical care and peace of mind for their loved ones. Taking the time now to create one can make all the difference later.

If you’re ready to get started, consider working with an attorney to ensure your directive meets your state’s legal requirements and fully reflects your wishes.

Background

Assets:

• Checking and savings accounts (~$5,000)
• A car (fully owned)
• Personal belongings, including a laptop, furniture, and jewelry
• A modest life insurance policy through work

Emily always assumed esate planning was something she could address later in life-after marriage, buying a home, or building significant wealth. Like many young professionals, she believed she simply didn’t have “enough” to justify creating a will.

The Turning Point

After attending a friend’s funeral where no estate plan was in place, Emily witnessed firsthand the confusion and family conflict that followed:

• Family members didn’t agree on who should receive personal belongings
• The bank account was frozen, delaying access to funds for funeral expenses
• Friends were unsure of what Emily’s friend would have wanted for the distribution of items with sentimental value. 

Emily realized that without a will, even a modest estate can cause major complications for love ones.

What Emily Did

Emily worked with an attorney to put the following in place:

• Last Will and Testament: To ensure her assets would go to her younger sister and close friends.
• Healthcare Directive: Appointing her mother to make medical decisions if she was ever incapacitated.
• Power of Attorney: Naming her father to handle financial affairs in an emergency.

The Unexpected

Just two years later, Emily was involved in a serious car accident. While she eventually recovered, she was temporarily unconscious and unable to make medical or financial decisions. Because she had completed her estate plan:

• Her mother could immediately step in to make medical choices
• Her father was able to access her accounts to pay her rent and other bills
• Her wishes regarding her personal property were clearly documented, giving peace of mind to her family

The Takeaway

Emily didn’t have significant wealth-but she had enough to matter.

Without her estate plan:

• Her family would have had to go through the courts to gain decision-making authority
• Her accounts could have been locked
• Her loved ones may have faced conflict and uncertainty about her wishes

Estate planning isn’t just for the wealthy or the elderly-it’s for anyone who wants to protect their voice, their assets, and their family.

Even a simple will and basic documents like a Power of Attorney and Healthcare Directive can make a world of difference in an emergency.

Final Thought

The best time to create a will is before you think you need it. 

Planning ahead gives you control and protects the people you care about from legal headaches during already difficult times.

Catch Part 1 here.

If 2024 was the year of emerging compliance trends, 2025 is the year of enforcement-level specificity. Employers are facing new laws that regulate everything from how to write a job posting to how quickly you must deliver a personnel file. Below, we go beyond the headlines and into the weeds on state laws that will affect your team’s procedures, documentation, and legal exposure.

Sick Leave Laws are No Longer Optional-They’re Complex

Forget the “one-size-fits-all” paid sick leave policies. States are now layering in nuanced rules that make multi-jurisdicitonal compliance a challenge.

Minnesota (ESST Updates)

• Effective July 1, 2025, the standarad for notice changed from “as soon as practicable” to “as reasonably required by the employer.”
• Employers may now require reasonable documenation after just 2 consecutive missed days (down from 3).
• Clarified that employees may voluntarily trade shifts to cover ESST balances.

Michigan (Earned Sick Time) 

• Accrual: 1 hour per 30 hours worked.
• Caps:
  • Small employers (fewer than 10 employees): 40 hours/year
  • Larger employers: 72 hours/year
• Carryover allowed, but capped by employer size.
• Effective: February 21, 2025 (most employers); October 1, 2025 (small employers)

Nebraska (Amended June 2025)

• Applies to employers with 11+ employees and those working 80+ hours/year in NE.
• Accrual: 1 hour per 30 hours worked
• Caps: 40 (for 11-19 employees) or 56 hours  (20+ employees)
• Unlimited carryover is permitted, but employers may limit usage annually.

✅ Compliance Tip: You must track hours worked by location if employees across state lines, especially in remote or hybrid work arrangements.

Pay Transparency Laws are Rewriting Job Postings

Employers in multiple states must now treat job postings as legal documents-with specific, required disclosures.

Illinois

• Must list wage/salary range and benefits in job postings (15+ employees)
• Must notify employees of internal promotion opportunities within 14 days of an external posting.

Massachusetts

• Starting February 1, 2025, employers with 100+ employees must report race, gender, and pay data under wage reporting rules.
• October 29, 2025: Employers with 25+ employees must disclose:
  • Pay range in job postings
  • Pay range upon request

New Jersey (June 2025)

• Applies to employers with 10+ employees
• Job postings must include:
  • Wage or wage range
  • List of all benefits and compensation programs available within the first 12 months.

✅ Audit Action: Do your job posting templates meet the strictest state requirements? If not, your risk increases every time a position is advertised.

Whistleblower, “Captive Audience”, and Political Neutrality Protections are Expanding

Sates are implementing laws that prohibit employers from influencing employee political or religious views.

California

Employers may not require attendance at meetings promoting religious or political views.

New laws require posting of whistleblower rights-model notice available from the state.

Rhode Island

Effective July 2, 2025: Employers may not retaliate against employees who refuse to attend meetings focused on employer opinions related to religion or politics.

Illinois

Employers may not:

• Discriminate against employees for their reproductive health decisions.
• Discriminate based on family responsibilities, including caring for ill family members.
• Retaliate against employees for disclosing saftey or legal concerns in good faith.

✅ Training Update: Managers need to be trained to avoid language or behavior that could trigger claims under these new categories of protected rights.

Personnel Records Access, Posters, and Pay Stub Disclosures

States are adding detailed administrative and notice requirements that can result in penalties if missed.

Washington

• Personnel file access: Employers must provide copies within 21 days upon request-free of charge.
• Definition of personnel file incudes:
  • Job applications
  • Performance Reviews
  • Disciplinary records (even if closed)
  • Reasonable accommodation records
  • Payroll and employment agreements

Ohio

Pay Stub Protection Act (April 8, 2025): Must include net/gross pay, hours worked, deductions, and more in written or electronic statements.

Pennsylvania

Employers with 50+ employees must physically or electronically post a new veteran’s rights notice by January 1, 2026.

✅ Poster & Recordkeeping Audit: Make sure posters are updated by state and confirm your HRIS system can fulfill document requests quickly.

AI Regulations and Automated Hiring Tools

Employers are being held responsible for discriminatory outcomes even if they use third-party AI tools.

California

Final employment regulations prohibit use of automated decision systems that result in protected class discriminationincludes tone of voice, facial recognition, or other biometric tools.

New Jersey

Clarifies that liability exists even if the employer did not build the AI tool. The key factor is how the AI was used and whether it created disparate impact.

Texas

Texas Responsible Artificial Governance Act (January 1, 2026): Explicit ban on intentional AI-driven discrimination. 

✅ Policy Alert: Companies must create an AI usage policy, train HR teams, and review third-party vendor tools.

Wrapping It Up: It’s Time to Shift from Reactive to Proactive Compliance

The pattern is clear: states are stepping into legislate where federal law is silent, often with specific deadlines, disclosures, and technicalities that trip up even well-meaning employers.

Your best protection in this landscape?

• Audit your policies.
• Update your employee handbooks.
• Track state-specific implementation dates.
• Train managers, HR, and compliance teams regularly.
• Partner with legal counsel who can interpret and implement these changes for your unique workforce.

Need Help Untangling This Web?

Our legal and compliance teams are ready to help you:

• Conduct a multi-state compliance audit
• Draft new policies to reflect paid leave and posting requirements
• Review AI and hiring practices for bias and exposure

Reach out to us for a consultation today!