California has finally delivered the clarity trade creditors have been waiting for. With Governor Newsom’s signing of AB 1521 on October 1, 2025, California law now formally defines “trade credit” and makes clear that it is not a “covered commercial debt” under SB 1286.

What This Means for Trade Creditors

For the past year, SB 1286 created significant confusion in the credit community. The law, which took effect July 1, 2025, expanded California’s Rosenthal Fair Debt Collection Practices Act-a statute designed for consumer debt-to include certain small-business debts.

The issue? It wasn’t clear whether open-account trade credits-the type of commonly used by material suppliers, distributors, and contractors-was also included. This lack of clarity created compliance concerns and unnecessary costs for businesses whose focus is selling goods and services, not acting as lenders.

AB 1521 resolves that uncertainty by recognizing what credit professionals have long understood: trade credit is different.

Key Fixes Under AB 1521

AB 1521 amends California Civil Code and does two important things:

1. Expressly excludes trade credit from the definition of “covered commercial debt.”
2. Defines trade credit for the first time in California law as:
   • Credit extended by a business primarily engaged in providing goods, materials, equipment, or services; and
   • Credit extended in connection with those goods or services (unless structured as lease financing under the Financial Code).

This change formally separates trade credit from loans, commercial financing, and debt buying-recognizing it as its own category of credit essential to B2B commerce.

Key Dates to Know

• SB 1286 applies to covered commercial debts entered into, renewed, sold, or assigned on or after July 1, 2025.
• AB 1521 takes effect January 1, 2026, officially defining and excluding trade credit from SB 1286.

What You Should Do Now

While AB 1521 doesn’t take effect until January 1, 2026, its legislative history makes one point clear: trade credit was never intended to fall under SB 1286.

That gives trade creditors a defensible position to treat open-account credit as excluded even during the interim period between July 1, 2025, and January 1, 2026.

Still, every business is different. Now is the time to:

• Review your credit policies and agreements to ensure they align with the updated definitions.
• Confirm that your collection practices remain compliant and clearly distinguish trade credit from financing activities.
• Consult with experienced legal counsel to determine how these changes impact your specific credit operations.

Why This is a Win for Suppliers and Distributors

This legislation isn’t just a fix-it’s a recognition. AB 1521 affirms that trade credit is a vital part of doing business. By clearly defining and excluding it from SB 1286, California law now better reflects how suppliers, contractors, and distributors operate in the real world.

You can continue extending credit terms with confidence, without the concern of being subject to consumer-style debt collection rules that were never designed for B2B transactions.

How We Can Help

WFJ has been closely following SB 1286 and AB 1521 developments from the beginning. Our attorneys regularly assist clients in reviewing credit terms, contracts, and collection practices to ensure compliance while maintaining strong customer relationships.

If you have questions about how these legislative updates impact your business, we’re here to help you interpret the changes and take proactive steps to stay protected.

Wagner, Falconer & Judd (WFJ) offers comprehensive legal servies through its partnership with LegalShield, designed to support clients across every stage of life. Join us as we walk through “member” Sarah’s journey, and learn how this service can support you through all of life’s major moments.

Early Adulthood: Establishing Legal Foundations

In her early 30s, Sarah realized it was time to get her legal life in order. She wanted to draft her first will, but didn’t know where to start. Through her LegalShield membership, she connected with attorney Socorro Caballero who guided her step-by-step in creating a last will and testament. Socorro also helped Sarah establish a Power of Attorney and Healthcare Directive, ensuring someone she trusted could make financial and medical decisions on her behalf if needed. She even helped her consider guardianship for future children and made sure her assets would be distributed according to her wishes- without the stress of high hourly legal fees.

Homeownership: Navigating Real Estate Matters

When Sarah bought her first home, she was excited-but overwhelmed by the purchase agreement and mortgage paperwork. Attorney Andrew Johnson reviewed her documents, explained her rights as a homeowner, and even highlighted clauses that could have caused issues later. Thanks to his support, Sarah negotiated terms that protected her investment and gave her confidence as a first-time homeowner.

Family Life: Managing Legal Affairs

As Sarah’s family grew, so did her legal questions-everything from guardianship forms to family law matters. Through LegalShield, she could consult with WFJ as often as needed. Whether updating her will after the birth of her second child or understanding legal responsibilities for her family, Sarah had a trusted legal team ready to provide guidance anytime.

Business Ventures: Legal Support for Entrepreneurs

Sarah decided to start her own consulting business. She faced questions about contracts, hiring employees, and protecting her intellectual property. With attorney Jordan Cardenas‘ guidance, Sarah drafted contracts, navigated employment obligations, and ensured her business was legally compliant-allowing her to focus on growth rather than potential legal pitfalls.

Preparing for the Future: Estate Planning

As Sarah approached retirement, she wanted to ensure her estate was properly structured and her loved ones were cared for. Attorney Rupi Bahia helped her set up a living trust, explained how to minimize probate, and tailored her estate plan to her unique family circumstances. Sarah left each consultation feeling confident that her legacy was protected.

Identity Protection: Safeguarding Personal Information

When Sarah became concerned about identity theft, she enrolled in LegalShield’s IDShield service. WFJ helped her monitor her personal information, investigate suspicious activity, and recover from any incidents, giving her peace of mind in today’s digital world.

Sarah’s journey demonstrates how LegalShield and WFJ evolve with member’s needs. From drafting wills and navigating home purchases to protecting family, business, and identity, the membership provides continous, accessible, and proactive legal support. With a trusted legal team in her corner, Sarah could face life’s milestones confidently, knowing she was protected at every step.

Disclosure: This case study features a hypothetical member for illustrative purposes only. Any resemblance to real people, businesses, or events is purely coincidental. Legal matters are unique, and individual circumstances may vary—consult with a qualified attorney for advice specific to your situation.

When managing large construction, equipment, or commercial projects, protecting your company’s cash flow isn’t just a financial necessity-it’s a survival strategy. Delayed payments, disputed invoices, and broken payment chains can quickly disrupt operations and threaten profitability.

That’s where Wagner Business Solutions comes in. Backed by the legal power of Wagner, Falconer & Judd, WBS is uniquely positioned to help businesses proactively manage credit risk and protect receivables before litigation becomes necessary.

Why Pre-Litigation Protection Matters

Most companies don’t think about involving legal support until after a payment problem arises. But by then, you’re already in reactive mode-chasing funds, facing potential defaults, and spending more time and money than necessary.

WBS flips the script. Our team works hand-in-hand with credit and finance departments to help prevent payment issues from escalating through:

• legal-backed due diligence
• early enforcement tools
• lien focused strategies for receivables protection

Three Ways WBS Protects Your Cash Flow

• Mechanic’s Lien and Bond Opinion Letters

WBS offers timely, state-specific legal opinions that determine your eligibility to file a mechanic’s lien or make a bond claim. This step is vital to ensuring your company maintains leverage when a customer fails to pay.

Why it matters:

These tools act as pre-litigation enforcement options-often prompting payment without ever going to court.

• UCC-1 Filings and Security Agreements

We help clients formalize secured interests through UCC-1 filings and properly drafted security agreements. This puts your company in a stronger position to recover goods or funds if a debtor defaults.

Why it matters:

Unsecured creditors often find themselves last in line. Securing your interest increases the odds of full recovery while preserving valuable customer relationships.

• Demand Letters and Legal Escalation

Sometimes, a strongly worded demand letter from legal counsel is all it takes to get results. WBS attorneys are experienced in crafting persuasive letters that communicate your rights and readiness to act-without alienating the customer.

Why it matters:

It demonstrates seriousness while providing an opportunity for the other party to resolve the issue before litigation begins.

Partnering with Your Finance Team

WBS doesn’t replace your internal team-we enhance it. By giving credit and finance professionals the legal tools and insight they need early in the process, we help them:

• Evaluate credit applications for enforceable terms
• Strengthen internal collections procedures
• Protect lien and bond rights before the deadlines pass
• Make strategic decisions about escalation timing

The Bottom Line

Litigation should be your last resort, not your first defense. Wagner Business Solutions helps businesses across the construction, equipment, HVAC and commercial service sectors enforce payment rights early, legally, and effectively-without burning bridges.

To learn more about how WBS can support your finance team and secure your receivables before problems escalate, contact our team.

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.