Independent contractors or employees? It’s not a new question. We’ve all been grappling with it for years, but why does the issue keep circling back around, and dare I say, keep getting more complicated?

People are divided on the subject. “Yes, I’m positive my design consultant is an independent contractor.” “No, that office manager of yours really needs to be on payroll as an employee.” We can’t seem to agree. Why is that?

Independent Contractor ABC Test

Well, it’s not that as intelligent business people, we can’t apply a set of rules to a situation and determine the right answer. If there were a standard, we’d all probably be able to figure it out and agree. But that’s the problem, there simply isn’t just one set of rules – until maybe now, with the recent decision in Dynamex Operations West, Inc. v. Superior Court.

Dynamex is a company that provides delivery services for retail businesses and originally treated all of their drivers as employees. Motivated by being able to save costs by converting these drivers to independent contractor status, Dynamex ended up with a class action lawsuit that made its way all the way up to our state’s highest court. On April 30, 2018, the California Supreme Court not only unanimously ruled in favor of the plaintiffs who argued that they had been misclassified as independent contractors but established a new test for determining employee status under the Industrial Welfare Commission’s wage orders.

While not necessarily good news for employers, the new “ABC” test will allow for a more straight forward process in determining how to properly classify employees vs. independent contractors.

History of Independent Contractor Laws

Let’s go back and see how we got here. As a reminder, it’s unfortunately not up to the worker and the hiring company to determine the best model for working together. There is a common misconception that you can just “1099” the worker and be safe treating him/her as an independent contractor. While filing a 1099 to report income paid to the person can help reduce your penalties with the IRS should it be determined that the person was misclassified, the act of submitting a 1099 does not in and of itself establish independent contractor status.

Almost everyone has heard of the IRS’s 20 factor test, which was boiled down in 2007 to an 11 factor test focusing on 3 main areas. The IRS examines the behavioral and financial arrangement between the worker and the hiring company as well as the nature of their relationship. This type of test, called a “common law test” walks you through a series of questions helping to identify if the worker in practice is functioning independently or not. Unfortunately, oftentimes even after applying the multiple questions, the answer is a little murky and could honestly swing either way.

Other agencies, like the federal DOL, use a different methodology called the “economic realities test.” Like the common law test, there are a series of questions that one poses about the worker and the hiring entity aimed at determining if the worker is truly independent from an economic perspective from the hiring entity. Is this person truly, from a financial perspective operating an independent business?

The challenge with both the common law test and the economic realities test, is that there is no true “pass/fail.” For example, with the IRS’s 11 factor test, you are not guaranteed independent status if you answer 6 out of the 11 questions correctly.

The different factors are given varying weights depending upon the exact terms and conditions of a particular worker’s relationship with the hiring company. And unfortunately, clarity is sometimes not reached until years after the relationship is established when there is a complaint or lawsuit and then a final ruling. Employers have been left guessing and hoping that their independent contractors are classified correctly.

Until now. California has recently followed suit with a number of other states in the country who have opted to utilize a more streamlined test called an “ABC test.” This 3-prong approach requires the hiring entity to establish that all 3 of the factors of the test are met. If either A, B, or C cannot be established, the analysis is over – your worker is an employee and not an independent contractor.

Prior to the decision in Dynamex, California’s courts relied on a test established in a 1989 court case. The previous “Borello” test, much like the IRS’s or the DOL’s tests, frequently left one in doubt.
The court in the Dynamex decision intentionally patterned its new ABC test after the one used in the state of Massachusetts, long considered the most stringent test in the country.

How the Independent Contractor ABC Test Works in California

A worker is legally presumed to be an employee, unless:

A. The worker is free from the control and direction of the hiring company in connection with the performance of the work, both under the contract and in fact;

AND

B. The worker performs work that is outside the usual course of the hiring entity’s business;

AND

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.

While factors A (the worker needs to be free from control of the hiring company) and C (the worker needs to truly be engaged in running his/her own business) have been part and parcel of all of the other tests we’ve had to apply over the years, factor B will probably have the biggest impact on current independent contractor relationships. Unless the worker is being utilized to provide some type of service that is not the hiring company’s core business, the person will be considered an employee.

Keep in mind that this new ABC test will now be the benchmark in California for determining employee status under the Industrial Welfare Commission’s wage orders which are the body of law that defines working hours and conditions, minimum wage, overtime, meal and rest periods, exempt and non-exempt status, etc.

The California EDD may continue to use its current methodology when making determinations regarding state taxes and benefits such as unemployment, disability, etc. And the IRS and federal DOL may also continue using their own criteria. However, it is entirely possible that other agencies will also adopt the ABC standard. Soon after the Dynamex decision, Senator Bernie Sanders introduced a bill that would incorporate California’s new ABC test into the federal rules for determining independent contractor status under the National Labor Relations Act (NLRA). We are clearly experiencing a trend.

But for now as we are left with different tests being used by different agencies, the challenge for a California (or any) employer is that it’s not possible to treat someone as an independent contractor for some purposes while an employee for others. When deciding if someone is going to be on payroll or not, we have no choice but to apply the most stringent test that could come into play. And we’re back to the California ABC test.

None of this was an accident. The court in Dynamex made it clear that they didn’t want workers to be deprived of benefits to which they would be entitled if classified as employees. They also made it crystal clear that they don’t want companies attempting to save money and thus unfairly competing in the marketplace if they treat workers as independent contractors and save on the cost of the employers’ responsibilities such as payroll taxes, workers’ compensation, and other mandated benefits and protections.

What the decision seems to have failed to address head on is the evolution we’re experiencing that people refer to as the “gig” economy. More and more individuals are getting involved with companies such as Uber, Grub Hub, and a host of other online, on-demand service entities that allow people to pretty much decide how much they want to work and when. If this new ABC test is going to be applied – and applied retroactively as the recent California superior court decision (Johnson v. Imperial Showgirls) has indicated – gig companies are going to have a very hard time continuing to employ workers as independent contractors.

The Dynamex decision acknowledged that there is often greater freedom for workers to be treated as independent contractors but drove home the point that “if a business concludes that it improves the morale and/or productivity of a category of workers to afford them the freedom to set their own hours or to accept or decline a particular assignment, the business may do so while still treating the workers as employees for purposes of the wage order.” Point well taken.

Impact of the Independent Contractor ABC Test on Employers

So where does this leave California employers? While the ABC test is quite new, we urge employers to take it seriously and to proceed conservatively. While we expect further litigation and ensuing clarification about nuances in the interpretation of the alphabet, this California Supreme Court decision is not going away.

Our Checklist for Employers:

• Examine all current independent contractor relationships to ensure that they would meet the ABC test.
• Consider a formal independent contractor audit by an outside third party who will provide an un-biased assessment.
• If any independent contractors would not pass the ABC test, re-classify those workers.
• Review all existing written independent contractor agreements.
• Encourage any existing independent contractors who may otherwise meet the ABC test to truly and actively promote their own business. Employers could even assist these individuals with advice and resources regarding incorporation, licensure, insurance, marketing, etc.
• For any companies who currently rely heavily or exclusively on independent contractors to provide their core services, give thoughtful consideration to the potential cost of an audit, complaint, or lawsuit. Weigh this risk against the cost of converting your business model to one that relies on true employees.
• Finally, pay careful attention to the communication surrounding any decisions to make changes. The Dynamex folks created a great deal of liability for themselves by having drafted an internal memo in 2004, enumerating the potential cost savings of converting all of their employees to independent contractor status. Learn from their mistake and consider hiring outside employment counsel to advise and protect audit findings and decisions under attorney-client privilege.
• Be careful about developing a communication plan for any worker reclassifications. How workers will react to the news will be directly tied to what and how it is delivered. Get some good HR and even PR help in this area.

And remember, relax™ , We Take the Stress out of HR™ ! Contact us for more information!

Human Resources is an essential component of any company that often gets overlooked. Every company needs a dedicated team with the right expertise when it comes to navigating the waters of Human Resources.

A dedicated and skilled HR department needs to handle more than employee relations counseling, payroll, and training. For a Human Resources department to be genuinely effective, it needs to serve every facet of a company expertly.

As a highly skilled and tested full-service human resource consulting firm, Vantaggio HR is uniquely suited to help companies of all sizes with the myriad intricacies that come with providing an instrumental, productive, and comprehensive HR department.

The Importance of Human Resources

Human Resources is a vital component to the livelihood of any company, and most importantly, its employees. HR plays many vital roles that deal with several areas crucial to a company’s development and success. These areas include everything from employee morale to labor regulations to payroll.

With so many essential tasks under the purview of an HR department, you need a dedicated and skilled team working for you. As a full-service human resource consulting firm, Vantaggio HR possesses the skills and resources required to provide your company with any and all HR needs.

What Sets Vantaggio HR Apart

Vantaggio HR is a unique HR solution because we don’t offer one blanket service for everyone. Instead, we believe in a ground-up approach designed for scalability depending on your individual needs, both current and future.

Our HR consultants specialize in employment law compliance, handling and resolving complex employee issues, and instituting strong HR policies and procedures built to last. Above all that, what truly sets us apart is our relax™ HR consulting hotline. The relax™ consulting hotline stands for Real-Time Employment & Labor Advice Xactly when you need it!

We stand by our belief that you deserve accessible and comprehensive solutions. That’s why we give our clients peace of mind thanks to a dedicated HR professional who’s always available by phone or email, providing immediate response to any HR questions and assistance with related issues and concerns.

The Vantaggio HR relax™ hotline also provides:

• Telephone and email consulting hotline
• A dedicated HR consultant assigned to your account
• Introductory Employment Practices Review meeting and follow up recommendations report
• Access to Vantaggio HR’s library of customizable HR forms
• One complete set of federal and state required employment posters
• E-Newsletter and updates on interesting and timely HR issues
• Discounted pricing on our relax™ Employee Handbook – for companies that want the
  convenience of a short, streamlined handbook that contains the essentials of best HR practices.

Vantaggio HR is Your Full-Service Solution to Any HR Need.

As a full-service HR consulting firm, we handle all the facets of Human Resources for you. Our mission is in our name, “Vantaggio,” an Italian word meaning advantage, benefit, leverage, and Profit.

Vantaggio HR is uniquely suited to serve as your HR solution thanks to our extensive available resources and over 20 years of experience and success. We set ourselves apart from other HR solutions because we do more than merely offer a way to track everything. Instead, we provide assistance, materials, and resources that help you manage your company. We’re not content with being “good enough.” That’s why we provide expert advice and guidance helping you achieve higher levels of success.

Because we believe in putting the human in Human Resources, we offer a full range of custom-tailored services and consulting for all degrees of need, whether you need an entire HR department or case-specific expertise for your existing HR Department.

Notable Services Vantaggio HR Offers:

• HR Outsourcing
• Labor Law Compliance (multi-state)
• Employee Handbooks
• HR Hotline
• HR Compliance Audits
• Operational Assessment of HR Departments
• Sexual Harassment Prevention Training
• On-Site HR Services
• New Employer Set Up
• PEO Exit Services
• Discipline & Terminations
• Training & Development
• Recruiting
• COBRA Notice Kit
• Compensation Planning
• Employee Benefit & Retirement Plans
• Payroll Administration
• HRIS & Payroll Software Implementation
• Labor Commissioner Complaints
• Expert Witness Testimony
• Merger & Acquisition Consulting

When it comes to all your Human Resource needs, you and your employees deserve the best. At Vantaggio HR, we can help you with any, and all your HR needs no matter how big or small. If you would like to learn more about how we can help you achieve higher levels of success and profitability through comprehensive HR solutions, contact us today!

Last updated: May 2018

A recent California case (Minnick v. Automotive Creations, Inc.) ruled that an employee who worked for less than one full year was not entitled to vacation pay at the time of termination since the employer had a clear and unambiguous policy stating that employees do not earn or accrue vacation until after the first year of employment. While not inconsistent with the California Labor Commissioner’s previous positions on vacation waiting periods, this case does open up some additional, albeit a bit murky, possibilities for the design of a complaint vacation policy.

First a bit of background – nothing under California (or federal) law requires an employer to provide paid vacation to its employees. However, once a company decides to offer such benefits(whether called vacation, PTO or Personal Days – the name does not matter), the administration of these plans is highly regulated. California law views paid vacation as part of an employee’s wages as opposed to a gift or perk. Like any other compensation, once earned, vacation benefits legally cannot be forfeited. Existing law also provides that an employee’s right to vacation benefits is earned as the employee performs work, and as such, any unpaid portion of the employee’s vacation is due to the employee (pro-rated based on actual number of days worked) as part of wages payable upon termination. For example, if an employee is entitled to one week of vacation after 1 year of service, the right to that 1 week accrues as time goes by, so if the employee leaves after 6 months of service, half of the 1 week of vacation would be due and payable at the time of termination. That being the case, the Labor Commissioner has had a long-standing position that employers may impose waiting periods before new employees can begin accruing vacation – having approved waiting periods as long as 6 months or even a year. The waiting period, however, may not be a subterfuge. For example, a plan that provides no vacation in year 1, 4 weeks in year 2, and then 2 weeks in years 3 and onward would be viewed as an illegal plan since the Labor Commission feels that 2 of the 4 weeks earned in year 2 are actually earned in year 1. A plan that provides for no vacation in year 1, 2 weeks in year 2, and 3 weeks in years 3 would be considered legal. More typically, employers tend to impose 30, 60, or even 90-day initial waiting periods before vacation starts to accrue.

The Minnick case shed some additional light on an employer’s ability to enforce vacation accrual waiting periods. The court ruled that an employee who terminated employment prior to working less than one year was not entitled to any pro-rated vacation time because the company had a clear, unambiguous, and lawful policy that stated that employees do not start to earn or accrue vacation until after their first year of employment.

The Company’s policy read as follows:

All employees earn 1 week of vacation after completion of one year of service and a maximum of two weeks’ vacation after two years of service. This means that after you have completed your first anniversary with the company, you are entitled to take one week of paid vacation, and after the completion of two years of service, you will accrue two weeks paid vacation per year. This does not mean that you earn or accrue 1/12th of one week’s vacation accrual each month during your first year. You must complete one year of service with the company to be entitled to one week of vacation.

While we would agree that the policy is very clear about the employee not being entitled to accrue any vacation during the initial year, we find the remainder of it is still confusing. It falsely leads one to believe that the court approved vacation benefits that are granted in lump sums which is not the case. It appears that the employer intended (and the court agreed) that the one week the employee can take after his/her first anniversary is not a lump sum vesting but actually an advance on the 2 weeks that can be accrued during the second year of employment. The employee argued that the fact that “receiving” 1 week of vacation at the beginning of his second year meant that this was already a vested benefit. The court disagreed saying that employers are permitted to “front-load” vacation benefits, permitting the employee to take 1 week of vacation before it was actually earned. They noted that if an employee then left during his/her second year, he/she would only be entitled to a pro-rated share (“the vested portion”) of that year’s 2-week benefit.

While this case certainly brings more flexibility to employers in how they design their vacation policies, we would not recommend implementing something written like this employer’s policy. To achieve the results they were after, we’d suggest having worded the policy more like this:

All employees are eligible to begin accruing vacation benefits after completion of one year of service. Vacation benefits accrue at the rate of 3.08 hours per bi-weekly pay period worked which equates to a maximum of 2 weeks of vacation per year of service. Despite the fact that accruals do not begin until your 1st anniversary, upon completion of 1 year of service you will be allowed to take 1 week of vacation as an advance on the vacation to be earned during your second year with the company. Going forward you will be allowed to accrue no more than 2 weeks of vacation for each year worked.

Vacation accruals that grant a certain number of hours of vacation to employees per pay period or per hour worked are the easiest to understand and to track. These types of accruals can be set up in most payroll systems, which eliminates the ambiguity over how much vacation is owed at what point in time. Keep in mind that just because accrued vacation is on the books, an employer does not have to permit employees to take time off. Vacation scheduling is at the discretion of the employer. Despite the policy in this case having been declared legal by the court, having a policy that describes benefits in lump sum amounts, when by law the employee accrues the rights to the benefit as work is performed, is confusing for everyone and opens up the door to claims of impropriety.

The case further underscores for employers the need to have written vacation policies that are clear, unambiguous, and legally compliant; and to ensure that such policies are consistently followed in practice. With new light on options for employers, this is a good time to audit and re-examine your company’s vacation, PTO, and other paid time off policies.

With many years of experience designing, documenting, and administering vacation/paid time off plans, at Vantaggio we’re here to help. Please give us a call.

For more information, please contact us.

And remember, relax™, We Take the Stress out of HR™

Last updated: January 2018

Every year, California passes a number of new employment-related laws that while aimed at protecting employees, often complicate the lives of employers. While there were perhaps less bills passed in 2017 than in other years, the new laws California employers are faced with for 2018 are significant and far- reaching. To name a few, we now have a bifurcated increase in Minimum Wage, a New Parent Leave Act, prohibitions against asking applicants for Criminal Background Information, and employers now are prohibited from asking applicants about Salary History.

New California Employment Laws – The following is a description of most of the more impactful (but not all) new employment laws that unless otherwise stated, went into effect on 1/1/18:

Minimum Wage and Exemptions – Although SB 3 passed in 2016, effective 1/1/18, we had our next scheduled minimum wage increase. For employers with 25 or fewer employees, the new minimum wage is $10.50 per hour. For employers with 26 or more employees, the new minimum wage is $11.00 per hour. As a reminder, in California, minimum wage has an impact on more than just the employees who earn at that level. In order to be exempt from overtime, an employee must have job responsibilities that meet certain legal requirements and must generally be paid a salary that is at least twice minimum wage for the equivalent of full time work. This now means that the minimum salary requirement for exempt employees depends upon employer size and is either $43,680 or $45,750 per year.

Additionally, minimum wage has an impact on determining if insides sales employees are exempt and in determining when certain trade employees can be required to provide their own hand tools. Also keep in mind that close to 20 different cities and other municipalities in California have their own minimum wage ordinances.

Note that in 2017 a California appellate court decision (Vaquero v. Stoneledge Furniture) held that commissioned sales employees must be paid separately (at no less than minimum wage) for all mandatory rest breaks. The court further held that the employer cannot comply with this requirement by paying employees a recoverable draw, even if the draw is large enough to cover minimum wage for all hours worked.

For more information on exemptions, see Vantaggio’s Info Bulletins Exempt vs. Non-Exempt and Special Exemptions.

New Parent Leave Act – SB 63 requires employers with between 20 and 49 employees to provide up to 12 weeks of unpaid parental leave, in a 12-month period, to bond with a new child within one year of the child’s birth, adoption, or foster care placement. Prior to the enactment of this law, only employees who worked at a location with 50 or more employees in a-75 mile radius were required to provide baby bonding leave under both the Federal Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA). This law provides new benefits to employees at companies already subject to FMLA and CFRA who work at location with less than 50 employees in a 75-mile radius as well as to employees at smaller companies who are not subject to FMLA and CFRA. (For more details, see Vantaggio’s article California’s New Parent Leave Act.) Note that the California Fair Employment and Housing Council has published some proposed NPLA regulations – so we will be learning more in the coming months once those are finalized.

Sexual Harassment Training – SB 396 expands the required content that must be included as part of currently mandated sexual harassment prevention training that employers with 50 or more employees must provide to their supervisors and managers every 2 years. The curriculum must now include instruction on harassment based on gender identity, gender expression, and sexual orientation including practical examples. The law also requires that trainers have specific knowledge and expertise in these newly added areas. In addition, employers with 5 or more employees must immediately display a new Transgender Rights in the Workplace poster and begin distributing updated Sexual Harassment Info Sheets (updated December 2017) to all employees. (For more details, see Vantaggio’s article Sexual Harassment Training Expanded in CA.)

Note that all farm labor contractors, regardless of company size, as a condition for receiving or renewing a farm labor contractor’s license, are currently required to provide 2 hours of sexual harassment prevention training to all employees (supervisory and non-supervisory) annually. SB 295 adds the requirement that the training be in the language understood by each agricultural employee.

Criminal Background Information – AB 1008 makes it an unlawful employment practices for employers with 5 or more employees to include questions on a job application that require disclosure of an applicant’s conviction history and to perform a background check into an applicant’s criminal history until such time as the applicant has received a conditional offer of employment. Employers are further prohibited from making adverse employment decisions based on the results of a background check unless they can demonstrate that the applicant’s conviction history has a direct and adverse relationship with the specific duties of the job. Employers are required to consider – the nature and gravity of the offence, the time that has passed since the offense or the completion of the sentence, and the nature of the job. If an employer is considering rescinding the job offer, the employer must notify the applicant of their preliminary decision to disqualify the applicant and provide the applicant with 5 business days to respond to the notice and submit evidence. If within those 5 days the applicant notifies the employer that he/she disputes the accuracy of the information, the applicant will be afforded 5 additional business days to respond. After considering the information supplied by the applicant, if the employer makes the final decision to rescind the offer, the employer must notify the applicant of this decision in writing and must include a number of detailed pieces of information including how to challenge the decision and/or file a complaint. There are several exemptions from these new requirements for certain types of jobs where background checks are required by law. All of this is a dramatic change for most California employers, making it all the more important to enlist the services of a qualified and experienced third-party background check company who can help ensure compliance. Please contact us at Vantaggio for a recommendation.

Salary History Information – AB 168 prohibits employers from relying on an applicant’s salary history as a factor in determining whether or not to offer employment and in determining the salary to be offered. Additionally, employers may not, either personally or through an agent (such as a recruiter) seek history salary information, including benefits and compensation, from an applicant either orally or in writing. Applicants would not be prohibited from voluntarily disclosing, without prompting, salary information, and if they do so, employers may use this information in determining salary for that applicant. Upon reasonable request, an employer must provide the pay scale for a position to the applicant.

Paid Family Leave (aka Family Temporary Disability Insurance) – AB 908 increases the amount of weekly benefits payable to employees who apply for wage replacement while taking time off to care for family members. The bill also removes the 7-day waiting period before benefits are payable.

Contractors Liable for Subcontractors’ Wages – AB 1701 imposes liability onto the general contractor on private construction contracts for unpaid wages and fringe benefit contributions or payments that a subcontractor (at any tier) owes a laborer who performs work on contracts entered into after January 1, 2018. Subcontractors are required, upon request from the direct contractor, to provide payroll records and other information to confirm that all wages, benefits, and other contributions have been made. The law does not prohibit contractors from establishing or enforcing lawful remedies against any of its subcontractors. Note that in 2017, for the very first time, the CA Labor Commissioner fined a general contractor $249,879 for unpaid overtime, minimum wage, final pay, and rest break violations for one of its drywall and framing subcontractors!

With the current trend, we strongly recommend that general contractors use well drafted written contracts that include indemnity and hold harmless provisions to protect against unpaid wage or benefits claims by subcontractors’ employees. Additional language should be added requiring strict compliance with all applicable wage and hour regulations. General contractors should consult immediately with counsel experienced in this area of the law to take the necessary precautions. Please call us if you would like a referral.

Wage Discrimination – Prior to the implementation of California’s Fair Pay Act (AB 358, 2015), California law required employers to pay employees at the same rate of pay as employees of the opposite sex or another ethnicity who perform equal work at the same establishment. This law made a number of significant legal changes, notably removing the requirement that the employees in question have to be at the same establishment, and instead of “equal work,” the pay must be the same for “substantially similar” work. Despite how it was generally perceived, the Fair Pay Act was not the piece of legislation that made unequal pay illegal, it made it easier for employees to bring unfair pay claims against private employers. This year, AB 46 extends the Fair Pay Act to also cover public employers. However, public employers are not subject to the provision that makes a willful violation of the law a misdemeanor.

Worksite Immigration Enforcement –   AB 450 includes a number of provisions to protect employees from immigration enforcement activities while at work and imposes fines between $2,000 and $10,000 per violation on employers who fail to comply. Employers are prohibited from allowing federal immigration officials to access non-public areas of the worksite without a warrant and from providing agents access to employee records without a subpoena or warrant. However, the latter provision does not apply to I-9 forms or other documents for which a Notice of Inspection was provided to the employer.

Regarding I-9 audits, employers must post a notice to inform employees of the impending inspection within 72 hours of receiving a Notice of Inspection. The notice must include specific information about the inspection and must be provided in the language that is normally used to communicate about employment issues. While employers must begin meeting this notice requirement on January 1, 2018, the Labor Commissioner has until July 1, 2018 to develop a model notice.

Employers must provide a copy of the Notice of Inspection to an affected employee (those who are identified to be lacking work authorization or whose documents have deficiencies) upon reasonable request. Affected employees and their collective bargaining representatives must be given a copy of the inspection results and the employer’s ensuing obligations within 72 hours of receiving this information.

Federal law already prohibits employers from reverifying the employment eligibility of current employees in a manner not required by law. AB 450 now makes doing so also a violation of state law that can subject an employer to civil penalties of up to $10,000.

Labor Commissioner’s Increased Authority –  SB 306 expands the California Labor Commissioner’s authority by allowing an employer to now be investigated even without  an employee complaint in situations where the Labor Commissioner suspects retaliation or discrimination against an employee during a wage claim or other investigation. The Labor Commissioner could then “with reasonable cause” obtain a court order for injunctive relieve to prohibit the employer from terminating or taking adverse action against the employee even before the investigation is complete. The employer would still be permitted to discipline or terminate the employee for reasons unrelated to the retaliation claim. Fines of $100 per day (up to a maximum of $20,000) can be assessed against the employer for willful refusal to comply with an order to reinstate an employee or former employee and/or for refusal to post a notice regarding the alleged conduct.

Gender Identification – SB 179 allows CA residents to choose any one of 3 options on state ID cards including birth certificates and drivers’ licenses – female, male, and “nonbinary,” The bill further simplifies the process for individuals to change their gender on legal documents. AB 1556 revises the Fair Employment and Housing Act (FEHA) by replacing gender specific pronouns in California’s anti-discrimination, anti-harassment, Pregnancy Disability Leave, and Family Medical leave laws – utilizing terms such as “the person” or “the employee” instead of “he” or “she.” And earlier in 2017, new FEHA guidelines were issued requiring employers to honor an employee’s request to be referred to by a preferred gender, name, or pronoun including gender neutral pronouns.

Human Trafficking Poster – Current law requires certain service organizations (businesses with liquor licenses, adult or sexually-oriented businesses, ER and urgent care, airports, passenger, light rail and bus stations, truck stops, etc.) to post a notice regarding slavery and human trafficking. AB 260 expands this posting requirement to hotels, motels, and bed and breakfast inns effective January 1, 2018. In addition to requiring the posters to now include a text number along with phone numbers where individuals can reach out for help, AB 260 makes other changes to the model notice which will be updated by the CA Dept. of Justice on or begore January 1, 2019.

Cleaning Products in the Workplace – Existing law requires that employers make available to employees Material Data Safety Sheets (MDSS) on hazardous chemicals in the workplace. SB 258 impacts employers that have certain designated products in the workplace that are used primarily for janitorial, industrial, or domestic cleaning purposes and include general cleaning products, air care products, automotive care products, and polish or floor maintenance products. Employers must now make MDSS available on these products. For more information on MDSS compliance, see Cal OSHA’s Publication, “Guide to the California Hazard Communication Regulation.”

Workers Compensation – Like most years, 2018 included a number of new laws regarding California Workers’ Compensation Insurance:

• AB 44 – Requires employers to provide a nurse case manager to employees who suffer workplace injuries in an act of domestic terrorism during a declared state of emergency. The Division of Workers’ Compensation is charged with developing regulations to implement this law.
• SB 189 – This law goes into effect on July 1, 2018 and provides clarity about when business owners, officers, board members, and LLC members may be excluded from workers’ compensation coverage.
• AB 1422 – Clarifies provisions of AB 2883 from 2016 regarding automatic stays on liens filed by medical providers charged with criminal fraud.
• SB 489 – Extends the billing deadline for providers of emergency workers’ compensation medical services from 30 to 180 days and was aimed to avoid a situation where a severely injured worker is unable to communicate about the injury in question until after the billing period had passed.

Other New CA Laws:

• AB 1221 – Mandatory Training for Alcohol Servers
• AB 219 – LGBT Rights for Long-Term Care Facility Residents
• AB 1102 – Whistleblower Protections for Employees in Health Facilities
• SB 490 – Wages and Licenses in the Barbering and Cosmetology Industry
• AB 1170 – Expands Anti-Discrimination Protection for Veterans

Other California Developments:

Waiting Periods on Vacation Plans –A recent California case (Minnick v. Automotive Creations, Inc.) ruled that an employee who worked for less than one full year was not entitled to vacation pay at the time of termination since the employer had a clear and unambiguous policy stating that employees do not earn or accrue vacation until after the first year of employment. While not inconsistent with the California Labor Commissioner’s previous positions on vacation waiting periods, this case does open up some additional, albeit a bit murky, possibilities for the design of a compliant vacation policy.

One Day of Rest in Seven – The California labor code stipulates that employees are entitled to at least one day off in a seven-day workweek and that the employer cannot cause an employee to lose a day of rest. An employee is allowed to accumulate rest days when the nature of the work requires the person to work more than 7 consecutive days, provided that the worker received the equivalent of one day of rest in seven during each calendar month. Additionally, the requirement does not apply to emergency situation or to work performed to protect life of the loss or destruction of property. That being said, these requirements have long been the subject of conflicting interpretation. In 2017, the California Supreme Court (Mendoza v. Nordstorm, Inc.) answered several questions. The court ruled that the day of rest is only guaranteed for each workweek, not any 7-day rolling period. As such, employees can work 6 consecutive days that cross two workweeks without a violation. The court also expounded upon what it means for an employer to “cause” an employee to lose a day of rest and opined that the employer is not forbidden from allowing or permitting an employee to independently decide not to take a day of rest. Additionally, the court ruled that the day of rest rules do not apply for employees who work less than 30 hours in any workweek or 6 hours in any one day.

Rest Breaks – As a reminder, in 2016, the California Supreme Court (Augustus v. ABM Security Services Inc.) ruled that employers cannot require employees to remain “on call” during rest periods even if they perform no work. As such, employers are discouraged from rest break policies that require employees to remain on-site during their rest breaks.

Computer Professionals Exemption – In order to be exempt from overtime, computer professionals in CA must have duties that meet the strict requirements under the law AND must be paid no less than rates established by the DIR each year. For 2018, computer professionals must be paid no less than $43.58 per hour or a monthly salary of $7,352.62, or an annual salary of $90,790.07.

Private School Employees – As a reminder, effective July 1, 2017 (AB 2230 from 2016) requires that in order to be exempt from overtime, private school teachers must be paid a salary that is comparable to those offered in public schools in the same district or county.

Posters – If you need to order new 2018 combined federal and state poster sets, please contact us at Info@VantaggioHR.com or call 1-877-VHR-relx (1-877-847-7359).    

And on the Federal Level:

IRS Mileage – The IRS updated the standard mileage rate for 2018 for use of an employee’s automobile – it’s now 54.5 cents per mile.

I-9 Forms – As a reminder a New I-9 Form was published and the Handbook For Employers was updated in mid 2017.

What should employers do?

• Review and update your employee handbooks to include a policy on New Parent Leave.
• Review and revise your Sexual Harassment Prevention training curriculum to ensure it covers all of the newly required elements. Ensure your trainer is well versed in these areas.
• Schedule your bi-annual Sexual Harassment Prevention training for all supervisors and managers and training for any new supervisors/managers.
• Consider Sexual Harassment Prevention training for your entire staff.
• Obtain and post your new employment posters.
• Update employee handbooks immediately due to the New Parent Leave Act and also to consider changing employee references throughout the document to be gender neutral.
• Update job applications to remove all language regarding criminal history and salary information.
• Amend hiring and background check practices to ensure appropriate timing and notifications regarding criminal background information.
• Review your scheduling practices to ensure meeting the 1 Day of Rest in 7 requirements.
• Ensure all employees are being paid the current minimum wage and that all exempt employees are paid the new minimum salary requirements. It would also be a good time to do an exempt/non-exempt audit of your employees to ensure proper classification.
• Ensure that your Commission Plans are in writing and that your pay practices for commissioned employees comply with the requirements to pay separately for rest breaks.
• Inspect your workplace for hazardous and MDSS covered chemicals and cleaning products.

Vantaggio can assist with answering additional questions; updating your handbook; ensuring that you have the proper forms, notices, and posters in place; conducting training; or implementing solutions to any of the above referenced compliance needs. We can even provide a complete HR audit for your company. For more information, contact us at Info@VantaggioHR.com or call 1-877-VHR-relx (1-877-847-7359)    

And remember, relax™ , We Take the Stress out of HR™  !

Effective Date – January 1, 2018

Weinstein Company, NBC, Fox News, don’t be next!

Not a day has gone by in recent months without hearing about a new sexual harassment claim or lawsuit in the media. With the heightened awareness surrounding this new climate of sexual harassment, take the time to protect your company and employees now by staying current on the mandatory training required in California. Make sure the training you’re currently doing isn’t obsolete!

On October 15, 2017, Governor Brown signed into law Senate Bill 396 that went into effect on January 1, 2018. This bill has 2 important components. First, it expands the required content that must be included as part of currently mandated sexual harassment prevention training that employers with 50 or more employees must provide to their supervisors and managers every 2 years. The curriculum must now include instruction on harassment based on gender identity, gender expression, and sexual orientation including practical examples. The law also requires that trainers have specific knowledge and expertise in these newly added areas.

In addition, employers with 5 or more employees must immediately display a new Transgender Rights in the Workplace poster and begin distributing updated Sexual Harassment Info Sheets (updated December 2017) to all employees.

To review the text of the Sexual Harassment Legislation in California, click here: SB 396

As a reminder, AB 1825 went into effect in 2006 and applies to employers with 50 or more employees, both inside and outside of California. It requires regular, bi-annual training to all supervisory staff on the prevention of sexual harassment, discrimination, and retaliation. In 2015, AB 2053 added the topic of “abusive conduct” aka “bullying” to the required content.

The question we’re all asking is that in today’s new world, can employers really limit their training to the minimum legal requirements? Do we now have a greater incentive to open up a dialogue on this topic with all employees – not just our managers and supervisors? At Vantaggio, we feel that employers can no longer afford to contain these important discussions to a 2-hour session every 2 years and with only a small portion of your staff. We’re encouraging all our clients, even those with less than 50 employees, to train all employees and to initiate conversations of this very pertinent topic across all segments of your organization.

Vantaggio offers a unique 2-hour AB 1825 compliant training that is designed for all employees to attend during the 1st hour, with supervisors and managers remaining for a 2nd hour of content.

Call us today to schedule your 2018 Sexual Harassment Training!

Effective Date – January 1, 2018

On October 12, 2017 Governor Brown signed into law Senate Bill 63 called the New Parent Leave Act (NPLA) which, effective January 1, 2018, will require employers with between 20-49 employees to provide up to 12 weeks of unpaid parental leave, in a 12-month period, to bond with a new child within one year of the child’s birth, adoption, or foster care placement.

Prior to the enactment of this law, only employers with 50 or more employees were required to provide baby bonding leave under both the Federal Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA). Employers with less than 50 employees could provide this type of baby bonding leave on a discretionary, non-protected basis, or not at all.

Similar to FMLA and CFRA, in order for an employee to be eligible for New Parent Leave, the employee must have worked for the employer for at least 12 months and have at least 1250 hours of service in the last 12 months. There is also a requirement that the employee work at a facility that has at least 20 employees within a 75-mile radius.

Unlike FMLA and CFRA, the New Parent Leave Act does not provide for time off for the employee’s own serious health condition or to care for a family member with a serious health condition.

However, keep in mind that any employer with 5 or more employees is also covered under California’s Pregnancy Disability Leave (PDL) law, which provides female employees with the right to accommodations which include up to 17 1/3 weeks (or 88 days) of medically necessary leave for pregnancy, birth, or related medical issues. As such a pregnant employee may take up to 17 1/3 weeks off for medically necessary pregnancy leave and then, if eligible under the New Parent Leave Act, request an additional 12 weeks of baby bonding leave – and all this time off is considered protected.

The following describes several of the other provisions of the law:

• Employers many not refuse to hire, discharge, demote, suspend, discriminate, or take any other adverse action against an employee for exercising his/her right to parental leave or from testifying regarding their or another employee’s right to parental leave.

• New Parent Leave may commence anytime within one year of the child’s birth, adoption, or placement in foster care.

• Employees must be allowed to use any available sick, vacation, or other paid time off during a New Parent Leave.

• Employers must maintain and pay for the employee’s health insurance benefits at the same level and conditions as would have existed if the employee had not gone out on leave. The employer may recover the cost of the employer paid premiums if the employee fails to return following the expiration of the employee’s leave as long as the reason the employee was unable to return is not due to the continuation, recurrence, or onset of the employee’s own serious health condition or other circumstance beyond the employee’s control.

• If both parents work for the same covered employer, the company does not have to authorize more than 12 weeks of combined leave for the two parents, nor is the employer required to provide simultaneous leave for both parents, but it may do so at its own discretion.

• Failure to provide an eligible employee with 12 weeks of protected leave, to return the employee to the same or comparable position, or take any adverse action in relationship to an employee’s request for New Parent Leave is considered an “unlawful employment practice” and could make the employer subject to a lawsuit.

• The New Parent Leave does not apply to employees who are eligible for baby bonding leave under FMLA or CFRA.

The law explicitly says that it applies to employees who are “not subject to” FMLA/CFRA. Some industry experts are posing the question as to whether or not employees who work for an FMLA/CFRA covered employer (50 or more employees) but who work at a worksite with less than 50 employees within a 75-mile radius would be entitled to NPL. Our interpretation is that while these employees work for a covered employer, they themselves would not be eligible for FMLA or CFRA and as such we believe they would be eligible for NPL. We are certain more clarification will come with time.

Additionally, the law states that to the extent existing CFRA regulations are within the scope of and not inconsistent with NPLA, those regulations will apply to governing the NPLA. This is an important detail not to be overlooked as it will provide a tremendous amount of guidance to employers about how to administer these new leaves with regards to things like notification, certifications, return to work, etc. To review a redline version of the New Parent Leave Act, click here: https://leginfo.legislature.ca.gov/ faces/billNavClient.xhtml?bill_id=201720180SB63

Checklist for Employers:

✓ Get familiar with the details of the NPLA;
✓ Implement or amend existing leave of absence written notices, forms, letters;
✓ Update your existing employee handbook;
✓ Train your managers about the NPL so that they can identify when an employee may be entitled to
leave and notify HR and senior management;
✓ Discuss how NPL will be tracked within payroll;
✓ Call Vantaggio if you have any questions or need help!

If you are feeling overwhelmed, you are not alone! At Vantaggio, we are here to help analyze your current policies and practices and make recommendations about getting into compliance in a way that best meets your company’s specific business needs.

Vantaggio HR has developed a Leave Administration Kit with easy to follow instructions, customizable letters for all types of leave (including FMLA, CFRA, PDL, Workers Comp, Military Spousal Leave, and the new NPLA), and ready-to-use leave request and Medical Certification forms. All for the attractive price of $495.00.

Call us today to order your 2018 Leave Administration Kit!

The following chart compares the factors used by various federal and state agencies and bodies of law to determine if a worker is an independent contractor or an employee.

It is important to keep in mind that simply calling someone an independent contractor and/or by providing the person with a 1099 does not ensure that the worker will meet the legal requirements.

The risks for employers who misclassify a worker as an independent contractor are significant and include back taxes, penalties, interest, unpaid personal incomes taxes of the misclassified worker, overtime, benefits, leave entitlement, and other rights and protections due to employees. This handout should serve as a generic summary of the very complex factors that various agencies use to make their determinations. There is, however, no substitute for case-specific advice regarding a particular worker. We strongly suggest that, in addition to our assistance, you seek legal counsel from an attorney experienced in this particular area of employment law, and/or a formal, written determination from the Hawaii Department of Industrial Relations and/or the IRS.

For more information, please contact us.

The following chart compares the factors used by six government agencies to determine if a worker is an independent contractor or an employee.

It is important to keep in mind that simply calling someone an independent contractor and/or by providing the person with a 1099 does not ensure that the worker will meet the legal requirements.

The risks for employers who misclassify a worker as an independent contractor are significant and include back taxes, penalties, interest, unpaid personal incomes taxes of the misclassified worker, overtime, benefits, leave entitlement, and other rights and protections due to employees. Effective January 1, 2011, California law renders the actual act of misclassification unlawful and subjects the employer to civil penalties of $5,000 to $25,000 per occurrence plus other significant disciplinary action. This handout should serve as a generic summary of the very complex factors that various agencies use to make their determinations. There is, however, no substitute for case-specific advice regarding a particular worker. We strongly suggest that, in addition to our assistance, you seek legal counsel from an attorney experienced in this particular area of employment law, and/or a formal, written determination from the EDD and/or the IRS.

For more information, please contact us.

In addition to the more typical “white collar” exemptions under both federal and state law (“Executive, Administrative, and Professional” exemptions), there are a number of special exemptions. This document provides guidelines about some of the more commonly used special exemptions.

SALES:  In general, the exemptions available for salespersons fall into one of the two following categories. Please keep in mind, however, that these sales exemptions are often misunderstood and misused by employers. In addition, there is significant deviation between federal and state regulations involving these exemptions. The following summarizes how to exempt salespersons from both federal and state law. For a more detailed discussion of the business implications of sales exemptions, please refer to our article, “Inside and Outside Sales Employees – Who is Exempt?”

An exempt OUTSIDE SALESPERSON must:

• be at least 18 years of age; AND
• devote more than 50% of his/her work time away from the employer’s place or places of business selling tangible or intangible items, or obtaining orders or contracts for products, services, or the use of facilities. Please note that work which is incidental to and/or in conjunction with outside sales does NOT count towards the 50% requirement. Examples of this type of work would include clerical activities such as drafting sales reports or booking appointments, as well as delivery, repair, or maintenance activities.

An exempt INSIDE SALESPERSON must:

• be employed by a company covered by the California Industrial Welfare Commission’s Wage Order 4 (Professional Services) or Wage Order 7 (Mercantile, i.e. retail and wholesale businesses); AND
• earn in excess of one and one-half times minimum wage; AND
• have more than 50% of his/her compensation for a representative period (not less than one month) be in the form of commissions of sales of goods or services.

An exempt COMPUTER PROFESSIONAL must:

• be compensated at a minimum hourly rate ($43.58 per hour for 2018) OR on a minimum salaried basis ($7,352.62 per month or $90,790.07 per year for 2018) which are established by the California Department of Industrial Relations; AND
• be engaged in work that is intellectual or creative AND requires the exercise of discretion and independent judgment; AND
• be highly skilled and proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, OR software engineering; AND
• have as his/her primary duty:
  • The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; OR
  • The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; OR
  • The design, documentation, testing, creation or modification of computer programs related to machine operating systems; OR
  • A combination of the aforementioned duties, the performance of which requires the same level of skills.

No higher learning degree is required, although an individual who meets this exemption may have one. There is also no licensing or certification requirement, and any such license or certification alone will not guarantee this exemption.

This exemption described above will not apply to an employee if ANY of the following are true:

• The employee is a trainee or in an entry-level position, who is learning to become proficient in the theoretical and practical application of highly specialized information to computer systems analysis, programming, and software engineering;
• The employee is in a computer-related occupation but has not attained the level of skill and expertise necessary to work independently and without close supervision;
• The employee is engaged in the operation of computers or in the manufacture, repair, or maintenance of computer hardware and related equipment;
• The employee is an engineer, drafter, machinist, or other professional whose work is highly dependent upon or facilitated by the use of computers and computer software programs, and who is skilled in computer-aided design software, including CAD/CAM, but who is not in a computer systems analysis or programming occupation;
• The employee is a writer engaged in writing material, including box labels, product descriptions, documentation, promotional material, setup and installation instructions, and other similar written information, either for print or for onscreen media, or who writes or provides content material intended to be read by customers, subscribers, or visitors to computer-related media such as the World Wide Web or CD-ROMs; or
• The employee is engaged in any of the exempt activities described on the previous page if those activities are for the purpose of creating imagery for effects used in the motion picture, television, or theatrical industry.

An exempt LEARNED OR ARTISTIC PROFFESIONAL must:

• be compensated on a salary basis at a rate not less two times minimum wage; AND
• have as his/her primary duty the performance of work that either:
  • requires advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or study, as distinguished from a general academic education and from an apprenticeship and from training in the performance of routine mental, manual or physical processes. (“Learned Professional”); OR
  • is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination or talent of the individual (“Artistic Professional”); AND

• perform work that is predominately intellectual and varied in character (as opposed to routine mental, manual, mechanical or physical work) and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time; AND
• consistently exercise discretion and independent judgment in the performance of the above duties.

For more information, please contact us!

On July 17, 2017, The U.S. Citizenship and Immigration Services (USCIS) issued a new Employment Eligibility Form commonly know as the I-9 form.  The primary changes to the new form are revisions to the Instructions and List of Acceptable Documents.   These changes will also be included in a revised Handbook for Employers: Guidance for Completing Form I9.

While employers may continue to use the I-9 form with a revision date of 11//14/16N, as of September 18, 2017 all employers must use the new 7/17/17 revised form.  As such we strongly encourage switching to this new form as soon as practicable.   Below is a link to the USCIS website to obtain the forms in English and Spanish (please note that the Spanish version may ONLY be used by employers in Puerto Rico).

https://www.uscis.gov/i-9

Understanding how to complete an I-9 form accurately, what documents you can and cannot ask for, when to recertify an employee and other related I-9  issues can be challenging.  When is the last time you audited your I-9’s to make sure your company is in compliance?

If you have any questions about how to complete the new I-9 form, or would like our assistance in conducting an I-9 audit for your company – CONTACT VANTAGGIO HR!

In addition to the more typical “white collar” exemptions under both federal and state law (“Executive, Administrative, and Professional” exemptions), there are a number of special exemptions. This document provides guidelines about some of the more commonly used special exemptions.

SALES: In general, the exemptions available for salespersons fall into one of the two following categories. Please keep in mind, however, that these sales exemptions are often misunderstood and misused by employers. In addition, there is significant deviation between federal and state regulations involving these exemptions. The following summarizes how to exempt salespersons from both federal and state law.

An exempt OUTSIDE SALESPERSON must:

• be employed for the purpose of, and who is customarily and regularly engagedawayfromtheemployer’splaceor places of business in: making sales or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; AND

• not spend more than 40% of his/her weekly work hours performing tasks other than those described above. Work performed incidental to and in conjunction with the employee’s own outside sales or solicitations (i.e. booking appointments, drafting reports) is considered exempt if it does not exceed the stated 40% limit; AND

• not spend more than 5% of his/her weekly hours on work unrelated to outside sales or solicitations.

An exempt INSIDE SALESPERSON must:

• be guaranteed compensation totaling $2,000 or more per month; whether paid weekly, biweekly or monthly; AND

• earn in excess of one and one-half times the federal minimum wage; AND

• be employed by a retail or service establishment;

• have more than 50% of his/her compensation for a representative period (not less than one month) be in the form of commissions of sales of goods or services.

An exempt COMPUTER PROFESSIONAL must:

• be guaranteed compensation totaling $2,000 or more a month, whether paid weekly, biweekly, or monthly.

• be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below;

• have as his/her primary duty:
  • The application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software or system functional specifications; OR
  • The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications; OR
  • The design, documentation, testing, creation or modification of computer programs related to machine operating systems; OR
  • A combination of the aforementioned duties, the performance of which requires the same level of skills.

No higher learning degree is required, although an individual who meets this exemption may have one. There is also no licensing or certification requirement, and any such license or certification alone will not guarantee this exemption.

The computer employee exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment. Employees whose work is highly dependent upon, or facilitated by, the use of computers and computer software programs (e.g., engineers, drafters and others skilled in computer-aided design software), but who are not primarily engaged in computer systems analysis and programming or other similarly skilled computer-related occupations identified in the primary duties test described above, are also not exempt under the computer employee exemption.

An exempt LEARNED OR CREATIVE PROFFESIONAL must:

• be compensated at a rate of not less than $455 per week (which includes a fixed salary or fixed fee of not less than $210 per week); AND

• have as his/her primary duty the performance of work that either:

• requires advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction or study, as distinguished from a general academic education and from an apprenticeship and from training in the performance of routine mental, manual or physical processes. (“Learned Professional”); OR

• is original and creative in character in a recognized field of artistic endeavor (as opposed to work which can be produced by a person endowed with general manual or intellectual ability and training), and the result of which depends primarily on the invention, imagination or talent of the individual (“Creative Professional”); AND

• perform work that is predominately intellectual and varied in character (as opposed to routine mental, manual, mechanical or physical work) and is of such character that the output produced or the result accomplished cannot be standardized in relation to a given period of time; AND

• consistently exercise discretion and independent judgment in the performance of the above duties.

For more information, please contact us!

Federal and state wage and hour laws require employers to pay minimum wages as well as overtime pay to some employees. Employees subject to these laws are called “non-exempt,” whereas employees to whom these provisions do not apply are called “exempt.” Distinguishing between these two classifications of employees is often not a simple job for an employer.

Important to remember:

• Titles are irrelevant. Simply calling someone a “manager,” does not make him or her an exempt employee.

• Paying someone a salary does not automatically make the employee exempt – nor does the amount of money you pay matter. Don’t assume that “hourly” means non-exempt and that “salaried” means exempt.

• An employee must meet both the federal and state exemptions in order to be truly exempt. Be careful since both sets of requirements are sometimes similar and sometimes quite different. This document summarizes how to classify someone as exempt in a manner that will meet both sets of requirements.

Who is exempt?

Under Hawaii law and federal Law, employees may be exempt from overtime pay provisions if they are employed in the following capacities and if their job descriptions meet the definition of the following job categories:

• executive
• administrative
• professional

The employee must:

1. be compensated on a salary basis (as defined in the regulations) at a rate not less than $455 per week.

AND

2. be “primarily engaged” in duties that meet the definition of exempt work. Details are provided on the next page.

NOTE: In addition to the more typical “white collar” exemptions under federal and state law, there are a number of special case exemptions (including computer professionals and salespersons).

ANYONE NOT MEETING THE ABOVE REQUIREMENTS IS NON-EXEMPT!

Exempt vs. Non-Exempt Specific Rules for Classification – Hawaii

In Hawaii, employees may be exempt from overtime pay provisions if they can accurately be classified in one of the three following categories as defined by federal/state law:

An exempt EXECUTIVE employee must:

• be compensated on a salary basis at a rate not less than $455 per week; AND

• have as his/her primary duty the management of the business or of one of its recognized departments or subdivisions;

• AND customarily and regularly direct the work of at least two or more full-time employees or their equivalent; AND

• have the authority to hire or fire other employees or have particular weight given to his/her suggestions and recommendations regarding the hiring, firing, advancement, promotion, or change of status of other employees; AND

• customarily and regularly exercise discretionary power.

An exempt ADMINISTRATIVE employee must:

• be compensated at a rate not less than $455 per week (which includes a fixed salary of not less than $210 per week)

• have as his/her primary duty the performance of office or non-manual work directly related to management policies or the general business operations of the employer or the employer’s customers; AND

• customarily and regularly exercise discretion and independent judgment with respect to matters of significance; AND

• regularly and directly assist a proprietor or an exempt executive or administrator OR perform, under only general supervision, work along specialized or technical lines requiring special training, experience or knowledge, OR execute special assignments and tasks under only general supervision.

An exempt PROFESSIONAL employee must:

• be compensated at a rate not less than $455 per week (which includes a fixed salary or fixed fee of not less than $210 per week)*; AND

• hold a valid license or certificate permitting the practice of law or medicine or any of their branches and who is actually engaged in the practice thereof or who is the holder of the requisite academic degree for the general practice of medicine and engaged in an internship or residency program for the profession; OR have as his/her primary duty the performance of work requiring advanced knowledge in a field of science or learning OR requiring invention, imagination, or talent in a recognized field of artistic endeavor; AND

• consistently exercise discretion and independent judgment in the performance of the above duties; AND

• perform work that is predominately intellectual and varied in character.

*The compensation/salary requirement does not apply to bona fide practitioners of law or medicine.

For more information, please contact us!

Federal and state wage and hour laws require employers to pay minimum wages as well as overtime pay to some employees. Employees subject to these laws are called “non-exempt,” whereas employees to whom these provisions do not apply are called “exempt.” Distinguishing between these two classifications of employees is often not a simple job for an employer.

Important to remember:

• Titles are irrelevant. Simply calling someone a “manager” does not make him/her an exempt employee.

• Paying someone a salary does not automatically make the employee exempt – nor does the amount of money you pay matter. Don’t assume that “hourly” means non-exempt and that “salaried” means exempt.

• An employee must meet both the federal and state exemptions in order to be truly exempt. Be careful since both sets of requirements are in some places similar and in others quite different. This document summarizes how to classify someone as exempt in a manner that will meet both sets of requirements.


Who is exempt?

Under California and federal law , employees may be exempt from overtime pay provisions if they are employed in the following capacities and if their job descriptions meet the state’s very narrow definition of the following job categories:

• executive
• administrative
• professional

The employee must:

1. Earn a monthly salary equivalent to no less than two times the state minimum wage for full time (40hours per week) employment. Keep in mind that both the state minimum salary requirements increase annually so employers will need to monitor these numbers on an annual basis.

AND

2. Be “primarily engaged” (more than half of the employee’s work time) in duties that meet the definition of exempt work.

NOTE: In addition to the more typical “white collar” exemptions under federal and state law, there are a number of special case exemptions (including computer professionals and salespersons).

ANYONE NOT MEETING THE ABOVE REQUIREMENTS IS NON-EXEMPT!

Exempt vs. Non-Exempt Rules for Classification – California

In California, employees may be exempt from overtime pay provisions if:

• They are paid a monthly salary equivalent to no less than two times the state minimum wage for full time (40 hours per week) employment; AND

• they can accurately be classified in one of the following categories as defined by federal/state law:

An exempt EXECUTIVE employee must:

• have as his/her primary duty the management of the business or of one of its recognized departments or subdivisions; AND

• customarily and regularly direct the work of at least 2 full-time employees or their equivalent; AND

• have the authority to hire or fire other employees or have particular weight given to his/her suggestions and recommendations regarding the hiring, firing, advancement, promotion, or change of status of other employees; AND

• customarily and regularly exercise discretionary power; AND

• devote more than 50 percent of his/her work time to the activities described above.

An exempt ADMINISTRATIVE employee must:

• have as his/her primary duty the performance of office or non-manual work directly related to management policies or the general business operations of the employer or the employer’s customers; AND

• customarily and regularly exercise discretion/independent judgment with respect to matters of significance; AND

• regularly and directly assist a proprietor or an exempt administrator OR perform, under only general supervision, work along specialized or technical lines requiring special training, experience or knowledge OR execute special assignments and tasks under only general supervision; AND

• devote more than 50 percent of his/her work time to the activities described above.

An exempt PROFESSIONAL employee must:

• be licensed or certified by the State of California and primarily engaged in the practice of law (lawyers, not legal assistants), medicine (physicians, not nurses), dentistry, optometry, architecture, engineering, teaching, accounting (CPAs only) OR primarily engaged in an occupation commonly recognized as a learned or artistic profession; AND

• customarily and regularly exercise discretion/independent judgment in performance of the above duties; AND

• perform work that is predominately intellectual and varied in character.

*Note: Licensed physicians or surgeons are exempt from overtime if their hourly pay is equal to or greater than $76.24 during 2016 (adjusted annually). **Pharmacists and registered nurses are not considered exempt professionals; they may only be treated as exempt if they fit the definition of an exempt executive or administrative employee.

For more information, please contact us!

Vantaggio HR offers supervisor training, all employee training and off-site training sessions in Hawaii dedicated to sexual harassment prevention in the workplace. The sessions have a purpose of educating employers and employees about this topic. Check out details and the various pricing options.

Supervisor Training – $1,875*: This 2-hour session is designed exclusively for managerial and supervisory staff.

All Employee Training – $1,975*: This 21⁄2 hour session is designed for all levels of employees. Non-supervisory staff will attend along with managers and supervisors for the first 1-hour session. After a brief break, managers and supervisors will remain for the 2nd hour.

• Conducted at your location.
• Cost includes all prep time, presentation, and written materials for up to 25 participants.
• Extra participants are $15 each.
• Discounts available for multiple sessions on same day.

Off-Site Training – $85 per person: Send 1 or more of your managers to our location for this 2-hour session.

*Supplemental rate applies when Ms. Lauraine Bifulco is the trainer.

Contact us to receive more information specific to the sexual harassment prevention training or to custom design a seminar for your needs!

Not only is regular harassment training a highly advisable way to keep harassment out of the workplace and limit employer liability, it’s also mandated by California law (AB 1825). Learn how to educate employers and employees about keeping ALL forms of harassment out of the workplace. Check out the requirements and pricing for this type of training.

Requirements

• Requires employers with 50 or more employees (includes all full time, part time, temporary, and independent contractors – even those who are outside of CA) to train California supervisors on sexual harassment every 2 years.
• Requires employers to train new supervisors within six months of their assuming a supervisory position.
• Training must be conducted by trainers with “knowledge and expertise in the prevention of harassment, discrimination, and retaliation.”
• Training must include “classroom” or other effective “interactive” means.

Pricing

Supervisor Training – $1,375*: This 2-hour session is designed exclusively for managerial and supervisory staff.

All Employee Training – $1,475*: This 21⁄2 hour session is designed for all levels of employees. Non-supervisory staff will attend along with managers and supervisors for the first 1-hour session. After a brief break, managers and supervisors will remain for the 2nd hour.

• Conducted at your location.
• Cost includes all prep time, presentation, and written materials for up to 25 participants.
• Extra participants are $15 each.
• Discounts available for multiple sessions on same day.

Off-Site Training – $85 per person: Send 1 or more of your managers to our location for this 2-hour session.

*Supplemental rate applies when Ms. Lauraine Bifulco is the trainer.

Contact us to receive more information specific to the sexual harassment prevention training or to custom design a seminar for your needs!

“Smart” Recruiting is not only important for the obvious reason of wanting to attract the best-qualified employees. In today’s complex legal climate, employers can be found liable for negligent hiring if they fail to show appropriate due diligence in the hiring process which results in unreasonable harm to others.

Contact us for more recruiting advice.

Example of negligent hiring might include:

• Not contacting former employers
• Not verifying licenses or certificates
• Not checking references
• Not checking for criminal records
• Not checking for history of drug or alcohol abuse

The following are some guidelines to follow when recruiting employees. Please keep in mind that it is important to scrutinize candidates appropriately, but also important to not violate the applicants’ rights to privacy or any other discrimination or labor laws.

KEYS TO SMART RECRUITING:

• Assess the Need – Evaluate carefully the exact nature of the position to be filled.
• Draft a Job Description – List the major and collateral job responsibilities, reporting structure, skills.
• Decide on Recruiting Media – Consider local and major newspapers, professional organization publications, job banks, Internet-based recruiting, trade and other schools, etc.
• Draft Job Ad – A well-crafted ad that includes just the right information can make all the difference in how many qualified candidates you obtain.
• Use Standard Employment Application – Even for candidates who submit resumes, a well-written job application serves a number of important legal and information-gathering purposes.
• Check References – Always check references, even if the candidate has been personally referred to you.Avoid friends and relatives and insist on speaking with at least one former boss.
• Conduct Background Checks and Drug/Alcohol Screening – The cost of these tests has become increasingly affordable. Use a reputable consumer reporting agency who will help ensure compliance with federal and state credit reporting laws.
• Conduct Phone Interviews – A brief phone interview can weed out unacceptable candidates.
• Conduct In Person Interviews –Make sure the interview is not superficial but be careful not to ask questions that violate federal or state laws. (See our handout on interviewing.)
• Use Written Job Offers – Formalize the job offer with a written letter detailing the terms and conditions of employment, start date, reporting structure, at-will nature of employment, etc.

Our seasoned HR consultants have years of recruiting experience in a variety of industries and would be delighted to help out with any aspect of this process. Please contact us for a customized quote.

Each year, California enacts a number of new employment-related laws that never seem to fail in making employers’ lives more difficult. 2016 is no different. In addition to an increase in Minimum Wage, California has new laws which impact Paid Sick Days, Piece Rate Pay, School Activities Leave, Kin Care, Retaliation, Reasonable Accommodation, E-Verify, and others. Additionally, the new CA Fair Pay Act, which mirrors proposed federal legislation, has both legal and practical implications for employers. The CA Fair Day’s Pay Act expands the labor commissioner’s authority and creates increased personal liability for an employer’s owners, directors, officers, and managing agents. And on both the federal and state level, classifying workers as Independent Contractors continues to get increasingly difficult. Now, more than ever, employers need to educate themselves on the changing legal landscape and ensure that their operations are compliant.

New California Employment Laws – The following is a brief description of a number (but not all) of new employment laws that unless otherwise stated, went into effect on 1/1/16:

Minimum Wage – AB 10, passed in 2013, provided for an increase in California’s minimum wage to $10.00 per hour effective January 1, 2016. As a reminder, in addition to having job responsibilities that are considered exempt duties under the law, exempt employees need to be paid at least twice minimum wage for the equivalent of full time work, or at least $41,600 annually in order to remain exempt from overtime. Note that sometime early in 2016, we expect the federal Department of Labor to also increase the minimum salary requirement for exempt employees which may well end up being higher than the current threshold in California.

Paid Sick Days – Only 13 days after California’s Healthy Workplaces, Healthy Families Act of 2014 went into effect, Governor Brown signed AB 304 into law on 7/13/15. This urgency piece of legislation was enacted to clear up confusion over the initial Paid Sick Days legislation. For more information, please see Vantaggio’s detailed article California’s Paid Sick Days Law Effective 7/1/15 Amended on 7/13/15!

Piece Rate – Historically, employers who paid employees a flat fee per item produced or service performed (common in the manufacturing and automotive industries) could use the total amount paid to the employee each week divided by the total hours worked in order to ensure that the employee was paid at least minimum wage and for calculating overtime. In 2013, two California court cases ruled that employers could not use this averaging method to ensure that employees were adequately compensated for paid breaks, recovery periods, and other non-productive time. Instead, employees need to be paid at least minimum wage for those periods on top of the piece-rate pay received. AB 1513 imposes significant record-keeping requirements for employers who utilize this method of compensation. Notably, employees’ pay stubs must show the total hours worked for paid rest and recovery periods and other non-productive time, the corresponding rates of pay, and the gross wages earned for these periods. Additionally, employers are required to pay employees for these periods at the greater of current minimum wage or the average hourly rate based on total hours worked exclusive of these periods.

School Activities/ Child Care Leave – Current law provides that employers with 25 or more employees must allow an employee who is a parent, guardian, or grandparent of a child in licensed child day care, kindergarten, or grades K to 12 to take up to 8 hours per month to a maximum of 40 hours per year for the purpose of participating in school activities and cannot discharge or discriminate against an employee for engaging in such activities. Employers are allowed to require documentation and can make the employee use available paid time off before taking additional unpaid time off. SB 579 expanded these rights to stepparents, foster parents, or persons who stand in loco parentis to a child. And instead of referencing a child day care facility, the law now refers to a child care provider. Further, activities allowed for such leave now also include addressing a child care provider or school emergency, and finding, enrolling, or re-enrolling a child in school or with a child care provider.

Kin Care – California’s existing Kin Care law requires employers who provide paid sick time off to their employees to allow at least ½ of any such accrued time off to be used to care for a family member who is sick. After passage of California’s new Paid Sick Days law in 2015, Kin Care and Paid Sick Leave laws differed in their definitions of who is a family member and the allowable reasons for using paid sick time. SB 579 amended the Kin Care law so that it now mirrors Paid Sick Days in these two areas. For more information, please see Vantaggio’s detailed article on Paid Sick Days.

Retaliation against Family Members – Existing law prohibits an employer from discharging or discriminating, retaliating, or taking any adverse action against an employee or applicant who has engaged in protected conduct or who has made a protected complaint (such as whistleblowing). AB 1509 expands this protection to an employee who is a family member of a person who has engaged in or who is perceived to have engaged in these protected activities.

Retaliation based on Reasonable Accommodation – Existing law protects employees from retaliation and discrimination based on their being in a protected category, and requires employers to provide reasonable accommodation of, among other things, a person’s disability and religious beliefs. It also prohibits discrimination against a person who has opposed such prohibited practices or because the person has filed a complaint. AB 987 makes the mere act of requesting accommodation based on religion or disability a protected activity and protects the person from retaliation – regardless of whether the requested accommodation was granted or not. This law further expands the definition of “employer” to include “client employers” and “controlling employers” (i.e. staffing agencies, PEOs, etc.) even if the retaliation is not coming from the direct employer.

California’s Fair Pay Act – Currently, employers must pay employees at the same rate of pay as employees of the opposite sex who perform equal work at the same establishment. AB 358 makes a number of significant legal changes to existing law, notably removing the requirement that the employees in question have to be at the same establishment, and now instead of “equal work,” the pay must be the same for “substantially similar” work. “Substantially similar work” means a composite of skill, effort, and responsibility that is performed under similar working conditions and does not have to be the exact same job title or function. Additionally, existing law provided for an automatic exemption when a gender wage differential was related to a seniority system, a merit system, quantity or quality of production, or any bona fide factor other than sex. AB 358 provides that an employer must now affirmatively demonstrate that one of these factors applies, that the factor has been applied reasonably, and that the factor accounts for the entire wage differential. In summary, AB 358 makes it easier for employees to bring unfair pay claims against employers.

AB 358 also makes it illegal for an employer to prohibit an employee from disclosing his/her own wages, discussing the wages of others, inquiring about another employee’s wages. Employers are; however, not required to disclose wages.

Personal Liability for Wage Claims – SB 588, oddly named “The Fair Day’s Pay Act,” expands the Labor Commissioner’s authority to enforce judgments for a number of wage and hour violations including unpaid wages, other compensation, penalties, and interest. The Labor Commissioner can place a lien on an employer’s property, levy a business’s bank accounts and/or accounts receivable, and impose a “stop order” on the company. Further it can prohibit an employer from closing down and re-opening its operations under a new business name in an attempt to avoid liability. Of particular note is that this law provides for individual liability for many wage and hour violations for business owners, directors, officers, and managing agents of a company!

E-Verify – AB 622 prohibits an employer for using the federal E-Verify system at any time or in any manner not required by federal law. Employers may not use E-Verify to check the employment authorization status of an existing employee or an applicant who has not yet received an offer of employment – unless otherwise required by federal law.

Private Attorneys General Act (PAGA) Claims – Under PAGA, an employee acting on his/her own behalf or on behalf of other current and former employees, can bring a civil action to enforce provision of the California Labor Code if the government has not done so. AB 1506 amends PAGA to allow employers a limited opportunity to cure two different types of violations relating to wage statements. Employees will be required to give notice to the employer, providing the opportunity to fix wage statements that failed to include the correct dates of the pay period and /or do not show the correct name or address of the employer. The corrected wage statement will be deemed to have fully cured the violation. However, an employer can only utilize this cure provision once in any 12-month period.

Other California Developments:

Posters – In addition to needing to post the new state minimum wage, California has two new/updated postings: Note to Employees – Injuries Caused by Work and California Whistleblower’s Protection. If you need to order new 2016 combined federal and state poster sets, please contact us at Info@VantaggioHR.com or call 1-877-VHR-relx (1-877-847-7359.  

Computer Professionals Exemption – In order to be exempt from overtime, computer professionals in CA must have duties that meet the strict requirements under the law AND must be paid no less than rates established by the DIR each year. For 2016, computer professionals must be paid no less than $41.85 per hour or a monthly salary of $7265.43, or an annual salary of $87,185.14.

California Family Rights Act – On July 1, 2015, the California’s Fair Employment and Housing Council’s updates to the California Family Rights Act (CFRA) went into effect. The intent was to clarify the existing regulations and bring them more in line with the federal Family Medical Leave Act (FMLA). While both sets of laws generally provide up to 12 weeks of unpaid leave to eligible employees and have many similar provisions, historically, the two laws also have had significant divergences. The new CFRA regulations incorporated many elements of the 2013 FMLA regulations, but intentionally elected to retain important differences and even created new ones. California employers with 50 or more employees must comply with both sets of rules. For more information, please see our detailed article, California’s Family Rights Act Amended on July 1, 2015.

And on the Federal Level:

Independent Contractors – The federal DOL continues to take a hard line approach to employers who want to classify workers as independent contractors. On July 15, 2015 they issued this Administrator’s Interpretation expressing their belief that “most workers [classified as independent contractors] are employees under the FLSA’s broad definitions.” As far back as 2012, California took dramatic measures to try to decrease the number of workers that were misclassified as independent contractors. For more information, see Vantaggio’s detailed article Independent Contractor Misclassification Penalties Now Severe.

ACA Reporting – With finally some good news for employers, the IRS extended its deadlines for employers to provide employees with Forms 1095-B and 1095-C to March 31, 2016 (initially February 1, 2016). The deadline for employers to file Forms 1094-B, 1095-B, 1094-C, and 1095-D has been extended to March 31, 2016 (initially February 29, 2016) if not filing electronically and June 30, 2016 (initially March 31, 2016) if filing electronically. More information can be found on the IRS’s website: Affordable Care Act Tax Provisions for Large Employers

IRS Mileage – The IRS updated the standard mileage rate for 2016 for use of an employee’s automobile – 54 cents per mile.

What should employers do?

• Review current sick leave, vacation, or PTO policies to ensure compliance with new mandated Sick Leave laws.
• Review CFRA/FMLA policy, procedure, administration process for compliance with updated regs.
• Review and update policy on school activities leave.
• Review policies on conflict of interest and family members working together.
• Update employee handbooks immediately due to new protected categories and expanded protections against retaliation.
• Audit for equal pay practices.
• Audit Independent Contractors.
• Audit Joint Employment relationships – PEOs and staffing agencies – due to increased legislation extending employment-related liability to all involved employers.
• Update all employment posters as of 1/1/16.
• Ensure all employees are being paid the current minimum wage and that all exempt employees are paid the new minimum salary requirements. It would also be a good time to do an exempt/non-exempt audit of your employees to ensure proper classification.
• Review all payroll rates and practices to avoid potential wage/hour claims and penalties that now carry PERSONAL LIABILITY.
• Plan your bi-annual Sexual Harassment Prevention training for supervisors and ensure that the training contains the new information about abusive conduct in the workplace.

As always, but is changing and employers’ liability is increasing. Vantaggio can assist with answering additional questions; updating your handbook; ensuring that you have the proper forms, notices, and posters in place; conducting training; or implementing solutions to any of the above referenced compliance needs. We can even provide a complete HR audit for your company. For more information, contact us at Info@VantaggioHR.com or call 1-877-VHR-relx (1-877-847-7359)  

 And remember, relax™ , We Take the Stress out of HR™ !

The information presented in this article is intended to be accurate and authoritative information on the subject matter at the time submitted for publication. It is distributed with the understanding that Vantaggio HR is not rendering legal advice and assumes no liability whatsoever in connection with its use.

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