Employment Partner Kelly Raney shared her insights on the state of family offices and the increasing employment and compliance risks they face for LA Times Studios’ Family Office Trends Roundtable.

Below are Kelly’s excerpts from the feature:

How are family offices evolving in 2026 compared to five or ten years ago?

The family office is materially different than it was five or ten years ago. Family offices used to be (and many still try) to run on trust, informality and longstanding personal relationships. There were not a lot of staff or executive turnover and no job descriptions, employment agreements or employee handbooks. HR infrastructure was non-existent or minimally run by someone tasked with it, but who had no experience (or, often, desire) to oversee it. That model has largely become legally untenable, particularly in California, where all facets of employment have become more complex and litigious. Today, sophisticated family offices have subsequent generational principals and C-suite caliber COOs, General Counsels and Chief Compliance Officers, who bring institutional expectations about employment practices. As a result, we see the formalization of the employer-employee dynamic, even if the setting remains intimate for many family offices.

What compliance risks are family offices underestimating?

In my experience representing several family offices across California, there is a consistent and potentially costly gap between how these organizations perceive their compliance posture and their actual exposure. I regularly encounter liability related to the misclassification of employees (at both the entity level and the household level) and inadequate protective documentation (such as insufficient or noncompliant NDAs and arbitration agreements). Employees must be properly classified, including at the tax treatment level of W2 versus 1099 contractor, and then within the W2 level of exempt/salaried versus non-exempt/hourly. One misclassified worker/employee managed through a family office can easily generate a six-figure liability, even before trial. Having employment documents that are drafted by sophisticated legal counsel and regularly updated can help to limit some of the potential liability.

What kinds of protections can family offices have and enforce for their employees with respect to confidentiality, competition and solicitation?

This is one of the most misunderstood areas of employment law (particularly California law). Family offices regularly have broad provisions on confidentiality/non-disclosure, non-competition and non-solicitation – often copied from outdated documents or out-of-state entities. Such restrictions must be drafted by sophisticated legal counsel to ensure the most protection possible in a legally enforceable way. In general, post-employment non-competition restrictions are not enforceable in California due to California Business & Professions Code section 16600. Because of the language in that statute (and related case law), non-solicitation and even non-disclosure restrictions may also not be enforceable if they are not well drafted.

What are the boundaries on monitoring and surveillance of employees in California (both family office staff and household staff)?

Family offices have a uniquely compelling interest in monitoring their employees. These organizations hold some of the most sensitive financial, personal and strategic information in existence, and the potential damage from insider leaks, data theft or breach of confidentiality is severe. At the same time, California has some of the strongest employee privacy protections. Unlike federal law, California’s right to privacy is enshrined in the California Constitution. This right is taken seriously, including within the employment context. While monitoring of employer-owned devices, email systems and networks is legally permissible, there must be clear advance notice to employees. With respect to audio recording, California is a two-party consent state, meaning the consent of one person choosing to record is not sufficient. So, make sure to provide notice of recording to employees when using security cameras, particularly if they record audio!

What distinguishes the most successful long-term advisor-family relationships from the rest?

I have had the opportunity to observe these relationships from a privileged vantage point, as a lawyer who is called when things go wrong (and thankfully also when they go right). The difference between an advisor relationship that lasts decades and one that ends quickly or badly comes down to role adaptation across generations, respect for and understanding of the family’s priorities, candor over comfort, boundaries around personal entanglement and clear documentation providing written clarity of role and expectations. For internal advisors, from an employment counsel standpoint, the relationships that endure are the ones with strong legal infrastructure that includes a well-drafted employment agreement, a clear compensation plan that is updated as circumstances change, a mutual understanding of role scope and expectations, and anticipatory provisions and appropriate plans for when the relationship ends.

Kelly M. Raney

Resources

Contact

Connect