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Vantaggio HR https://vantaggiohr.com The Employer's Advantage Sat, 20 Jun 2020 00:32:32 +0000 en-US hourly 1 PPP Loan Forgiveness Application Update https://vantaggiohr.com/industry-news/ppp-loan-forgiveness-update/ https://vantaggiohr.com/industry-news/ppp-loan-forgiveness-update/#respond Sat, 20 Jun 2020 00:32:32 +0000 https://vantaggiohr.com/?p=1907 PPP Loan Forgiveness Application Update And it’s Good News for Employers! Last Updated:  June 18th, 2020 The PPP Flexibility Act was signed into law on June 5, 2020 and provided significant relief to employers who had either already received or who planned to apply for the Paycheck Protection Program Loan. However, even after that initial round of good news, many questions remained unanswered. On 6/16/20 the Treasury Department published an updated PPP Loan Forgiveness Application as well as an EZ Loan Forgiveness Application that answer many of those questions and bring even more good news. Below is a brief summary of the new rules surrounding having your PPP loan forgiven. EZ Form – This form tremendously simplifies the forgiveness process by eliminating cumbersome calculations related to Wage Reductions and Full Time Equivalent (FTE) Reductions. If a borrower can establish one of the following 3, the EZ Loan Forgiveness Application form can be used. Borrower is Self-employed, an Independent Contractor, or a Sole Proprietor who had no employees at the time of the PPP loan application submission and did not include employee salaries in the computation of the loan amount. Borrower did not reduce the annual salary or hourly wages of any employee who did not make more than an annualized rate of $100,000 during any pay period in 2019 by more than 25% during Covered Period compared to the period of 1/1/20 to 3/31/20 AND the Borrower did not reduce the number of employees or the average paid hours of employees between 1/1/20 and the end of the Covered Period. Borrower did not reduce the annual salary or hourly wages of any employee who did not make more than an annualized rate of $100,000 during any pay period in 2019 by more than 25% during Covered Period compared to 1/1/20 […]

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PPP Loan Forgiveness Application Update

And it’s Good News for Employers!

Last Updated:  June 18th, 2020

The PPP Flexibility Act was signed into law on June 5, 2020 and provided significant relief to employers who had either already received or who planned to apply for the Paycheck Protection Program Loan. However, even after that initial round of good news, many questions remained unanswered. On 6/16/20 the Treasury Department published an updated PPP Loan Forgiveness Application as well as an EZ Loan Forgiveness Application that answer many of those questions and bring even more good news. Below is a brief summary of the new rules surrounding having your PPP loan forgiven.

  • EZ Form – This form tremendously simplifies the forgiveness process by eliminating cumbersome calculations related to Wage Reductions and Full Time Equivalent (FTE) Reductions. If a borrower can establish one of the following 3, the EZ Loan Forgiveness Application form can be used.
    • Borrower is Self-employed, an Independent Contractor, or a Sole Proprietor who had no employees at the time of the PPP loan application submission and did not include employee salaries in the computation of the loan amount.
    • Borrower did not reduce the annual salary or hourly wages of any employee who did not make more than an annualized rate of $100,000 during any pay period in 2019 by more than 25% during Covered Period compared to the period of 1/1/20 to 3/31/20 AND the Borrower did not reduce the number of employees or the average paid hours of employees between 1/1/20 and the end of the Covered Period.
    • Borrower did not reduce the annual salary or hourly wages of any employee who did not make more than an annualized rate of $100,000 during any pay period in 2019 by more than 25% during Covered Period compared to 1/1/20 and 3/31/20 AND the Borrower was unable to operate the business during the Covered Period at the same level as before 2/15/20 due to COVID-19 compliance.
  • Covered Period
    • OLD RULE: Initially, PPP loans were subject to an 8-week covered period that commenced on the date the loan was funded. Employers had only these 8 weeks during which they needed to establish that the loan monies were spent on payroll and other qualified expenses that would count towards the total amount of the loan that could be forgiven.
    • NEW RULE: Now, employers may choose to still use the initial 8-week period but have the option of utilizing a 24-week period to qualify for loan forgiveness.
  • Payroll Expenses
    • OLD RULE: Initially, at least 75% of the total loan amount needed to be spent on payroll costs for the loan to be fully forgivable. Spending less than 75% would cause the total loan forgiveness to be adjusted down on a pro-rated basis.
    • NEW RULE: Now, employers are only required to spend 60% of the total loan amount on payroll. After the initial passage of the PPP Flexibility Act, it appeared that this new 60% threshold was an “all or nothing” cliff. The newly released forgiveness application makes it clear that this is not the case. Spending less than 60% will not cause the entire loan amount to not be forgiven. It will simply cause the forgivable amount to be adjusted down.
  • Payroll for Owner-Employee, Self Employed, General Partner
    • OLD RULE: Initially, forgivable payroll for these individuals could not exceed 8 weeks worth of 2019 compensation, capped at $15,385.
    • NEW RULE: Now, employers who use the 8-week covered period can still use 8 weeks of 2019 payroll described above. However, employers who elect the 24-week period must limit owner compensation to 2.5 months of 2019 compensation, capped at $20,833. However, we now know that retirement plan costs for S corporation owners are allowed to be included in forgivable payroll costs.
  • Salary/Wage Reductions
    • OLD RULE: Initially, the total loan forgiveness was reduced dollar for dollar for any reductions in annual salaries or hourly wages for employees making less than the equivalent of $100,000 per year. A Safe Harbor existed for employers to bring those wages back up by 6/30/20 to avoid any loan forgiveness reduction related to wages.
    • NEW RULE: The prior Safe Harbor still exists but now allows employers to restore wages by the earlier of the date of the loan forgiveness application is submitted or 12/31/20.
  • Full-Time Equivalent (FTE) Reduction
    • OLD RULE: Initially, the total loan forgiveness was reduced proportionately if the employer cut their headcount during the Covered Period compared to one of 2 reference periods. A Safe Harbor existed for employers to bring their headcount back up by 6/30/20 to avoid any loan forgiveness reduction.
    • NEW RULE: The prior Safe Harbor still exists and is now referred to as Safe Harbor #2 and gives employers to the earlier of the date on which the loan forgiveness application is submitted or 12/31/20. Additionally, there is a new Safe Harbor #1 which allows an employer to simply check a box stating that due to COVID-19 compliance restrictions, the business has not been able to return to the same level of operations as before 2/15/20. If you can attest to that statement, you are given no loan forgiveness reduction related to FTE count.

There are still more open questions that we hope will get answered in regs and possibly Q&As from the SBA and/or the Treasury Department. This is evolving quickly, so keep informed.

Join us for a FREE WEBINAR on Wednesday, June 24, 2020 at 2 pm PDT to dig into some of these details and engage in a lively Q&A session. Please register in advance:

https://us02web.zoom.us/meeting/register/tZMtce-urzIjGtVDHTWR5dQUNCUnlLjtgt3T

 

Call us and schedule an appointment now if you need help projecting your PPP forgiveness and its impact on your staffing decisions. We’re here to help!

Call: 877-VHR-RELX

Email: info@vantaggioHR.com

 

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COVID-19 You Really Do Have Options https://vantaggiohr.com/industry-news/covid-19-you-really-do-have-options/ https://vantaggiohr.com/industry-news/covid-19-you-really-do-have-options/#respond Thu, 02 Apr 2020 20:08:27 +0000 https://vantaggiohr.com/?p=1894 The COVID-19 Crisis Options for Employers Last Updated:  March 31, 2020 In the wake of a devastating pandemic that has impacted us all, the US government has rallied to create resources to help companies survive this crisis. As HR experts and not tax specialists, we’ve prepared this list of resources for our valued clients but urge you to also seek help from your CPA, bank, and/or payroll company. We are finding that companies really need to look at all of the options available before deciding upon a go-forward plan. Whether you’re partially or fully open as an Essential Business, having your staff work remotely, or have had to shut down some or all of your operations, the following may be of assistance. Please call us if you want to brainstorm about the best way to keep your business and your employees in the best shape possible during these tough times. Family First Coronavirus Response Act (FFCRA) Effective 4/1/20. Applies to employers with 500 or fewer employees. Provides employees with 2 weeks of Emergency Paid Sick Leave for taking time off due to the employee being quarantined, having been advised to self -quarantine, experiencing COVID-19 symptoms, caring for another who is in one of these situations, or has a child whose school or childcare is closed. Provides employees with 12 weeks (initial 2 are unpaid, subsequent 10 are paid) of Expanded Family and Medical Leave (FMLA) for employees who need to take time off due to unavailability of children’s school or childcare due to COVID-19. Employers are reimbursed for the cost of the paid time by reducing their required deposit of payroll taxes including all federal income taxes withheld, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to […]

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The COVID-19 Crisis

Options for Employers

Last Updated:  March 31, 2020

In the wake of a devastating pandemic that has impacted us all, the US government has rallied to create resources to help companies survive this crisis.

As HR experts and not tax specialists, we’ve prepared this list of resources for our valued clients but urge you to also seek help from your CPA, bank, and/or payroll company. We are finding that companies really need to look at all of the options available before deciding upon a go-forward plan. Whether you’re partially or fully open as an Essential Business, having your staff work remotely, or have had to shut down some or all of your operations, the following may be of assistance.

Please call us if you want to brainstorm about the best way to keep your business and your employees in the best shape possible during these tough times.

Family First Coronavirus Response Act (FFCRA)

Payroll Tax Deferral

  • Effective immediately.
  • Applies to all businesses and non-profits.
  • Employers are able to defer payroll taxes unless they receive a loan under the SBA Paycheck Protection Program.
  • The employer’s portion of Social Security taxes (not Medicare and not the employee’s share of SS or Medicare) through the end of 2020 can be deferred. 1st 50% of deferral must be paid before 12/31/21. 2nd 50% of deferral must be paid before 12/31/22.
  • Info: https://www.schatz.senate.gov/coronavirus/payroll-tax-deferral

Employee Retention Credit:

  • Available to all employers regardless of size who do not take out an SBA small business loan.
  • To qualify, the employer has to show one of the following:
    Operations were fully or partially suspended due to a COVID-19 government-mandated shut-down order, OR
    Gross receipts declined by greater than 50% compared to same quarter in prior year. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.
  • Credit is 50% of qualifying wages up to $10,000 per employee paid after 3/12/20 and before 1/1/21. Amounts are limited to cash wages but can include a portion of employer provided healthcare. Does not include paid leave benefits under FFCRA for which the employer is separately eligible for tax credits.
  • For employers with less than 100 employees (average in 2019), the credit is based on wages paid to all employees, regardless if they worked or not.
  • For employers with more than 100 employees (average in 2019), the credit is allowed only for wages paid to employees who did not work during the calendar quarter.
  • Employers are reimbursed for the cost of the credit by reducing their required deposit of payroll taxes including all federal income taxes withheld, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees (not just those who got paid leave).
  • Can be reported as soon as 2nd quarter 2020 payroll tax returns (Form 941). If deposits are insufficient to cover the credit, employers can request and advanced payment from the IRS.
  • Details from IRS: https://www.irs.gov/newsroom/irs-employee-retention-credit-available-for-many-businesses-financially-impacted-by-covid-19 and https://www.irs.gov/newsroom/faqs-employee-retention-credit-under-the-cares-act

Paycheck Protection Program (PPP) Small Business Loans

  • Available for businesses with 500 or fewer employees (for hospitality including restaurants, not more than 500 per physical location) that were operational on 2/15/20, had employees on payroll, and paid wages and payroll taxes.
  • Businesses can apply beginning 4/3/20. Independent contractors and self-employed individuals can apply beginning 4/10/20.
  • Loans can be obtained through 6/30/20.
  • Loan amounts are the lesser of average monthly payroll costs during the prior year times 2.5 or $10 million. Payroll costs are capped at $100,000 per year for each employee.
  • Loan funds can be used for payroll, employee benefits, mortgage payments, rent, and utilities. Cannot be used for paid leave benefits under FFCRA for which the employer is separately eligible for tax credits. Any amounts used for these purposes in the 8 weeks following getting the loan will be forgiven. Not more than 25% of the forgiven amount can be for non payroll items.
  • Loan will not be forgiven if compensation is decreased for staff making less than $100,000 per year by more than 25% or if headcount is reduced. Employees may be rehired by 6/30/20 to preserve loan forgiveness.
  • Interest rate is 0.5% fixed. No fees to apply. Loan due in 2 years. No personal guarantee. Payments deferred for 6 months.
  • Info from Treasury Department: https://home.treasury.gov/system/files/136/PPP%20Borrower%20Information%20Fact%20Sheet.pdf
  • Info from the SBA: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp

Pandemic Unemployment Insurance Assistance

  • Available to individuals who are unemployed, partially unemployed, or unable to work between 1/27/20 and 12/31/20 for the following reasons directly related to COVID-19: diagnosed with, experiencing symptoms of, having a family member with, or caring for a family member with the disease; caring for a child whose school or childcare is closed; unable to reach the place of employment due to a quarantine; ordered to self quarantine; unable to commence a job or reach the job; became the breadwinner due to the head of household dying; has to quit a job; or has a place of employment that has closed.
  • Employees still apply to their state unemployment office and if eligible for benefits will receive an additional $600 on top of the amount allowable under state law up until 7/31/20.
  • Total length of unemployment is increased from 26 weeks (max in most states) to 39 weeks.
  • Also provides benefits to those normally not eligible for unemployment such as independent contractors, gig workers, and self-employed individuals.
  • States are encouraged to waive waiting periods for benefits and relax the requirements that an individual be actively seeking work to be eligible for benefits.
  • As this program will be administered by state unemployment offices, employers should encourage employees to apply if they feel they might be eligible. As states may retain some discretion in how this Federal assistance is applied in their location, we expect to learn more as time goes by.
  • More details: https://www.nelp.org/publication/unemployment-insurance-provisions-coronavirus-aid-relief-economic-security-cares-act/

Other Help from the SBA:

SBA Working Capital Disaster Loan

  • Funds from US Treasury.
  • Apply direction with SBA.
  • No cost to apply, no obligation to take if approved.
  • Up to $25,000 unsecured.
  • Automatic 12-month deferral.

SBA Economic Injury Disaster Loan

  • Up to $2 million.
  • Small business 3.75%, Non-Profits 2.75%.
  • Up to 30 years.
  • Provides an emergency grant of up to $10,000 to be made within 3 days of application. These grants do not have to be repaid as long as funds are used for:
    • providing paid sick leave to EEs unable to work due to the direct effect of the COVID–19;
    • maintaining payroll to retain EEs during business disruptions or substantial slowdowns;
    • meeting increased costs to obtain materials unavailable from the applicant’s original source due to interrupted supply chains;
    • making rent or mortgage payments; and
    • repaying obligations that cannot be met due to revenue losses.

More Questions – We know everyone’s heads are spinning and are here if you need to talk. Vantaggio remains fully open for business and is committed to helping you and your employees during this unprecedented time.

Call: 877-VHR-RELX

Email: info@vantaggioHR.com

 

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DOL DOES AN ABOUT-FACE ON SMALL BUSINESS EXEMPTIONS UNDER THE FFCRA https://vantaggiohr.com/industry-news/dol-labor-update/ https://vantaggiohr.com/industry-news/dol-labor-update/#respond Mon, 30 Mar 2020 18:29:22 +0000 https://vantaggiohr.com/?p=1878 Families First Coronavirus Response Act  DOL DOES AN ABOUT-FACE ON SMALL BUSINESS EXEMPTIONS UNDER THE FFCRA   Last Updated:  March 30, 2020 The Federal DOL has been publishing updates on the FFCRA in the form of Q&As on their website, pending formal regulations that we are told will be published in April. Please refer back to our previous articles:  Urgent HR Law COVID-19 Update 3/19/20 and Mandatory Notice for Employees as of 3/25/20  for the basic information. As a reminder, the FFCRA provides for a number of relief actions that directly impact employers and employees: Expanded Family and Medical Leave – which provides for a new type of paid FMLA leave. Emergency Paid Sick Leave – which provides for a new type of paid sick days benefit. This update will focus on the areas clarified by the DOL that have been the most confusing for employers. Effective Dates – The law goes into effect on April 1, 2020 and does not apply retroactively. Employees who experienced a job loss or loss of wages and hours prior to this date (layoff or furlough) would not be eligible for FFCRA as the law requires being currently employed on the date it becomes effective.  Exemptions Employers with Fewer than 50 Employees who can establish that compliance would jeopardize the viability of the business can be exempt from the FFCRA but ONLY for Paid Sick Leave or Extended Family Medical Leave for employees requesting time off due to the unavailability of children’s schools or childcare. This is a huge and surprising clarification from the DOL and means that no employers are exempt from providing Paid Sick Leave for employees with a COVID-19 related illness or quarantine for themselves or family members. To claim this exemption, an authorized officer of the company would need to […]

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Families First Coronavirus Response Act 

DOL DOES AN ABOUT-FACE ON SMALL BUSINESS EXEMPTIONS UNDER THE FFCRA

 

Last Updated:  March 30, 2020

The Federal DOL has been publishing updates on the FFCRA in the form of Q&As on their website, pending formal regulations that we are told will be published in April. Please refer back to our previous articles:  Urgent HR Law COVID-19 Update 3/19/20 and Mandatory Notice for Employees as of 3/25/20  for the basic information.

As a reminder, the FFCRA provides for a number of relief actions that directly impact employers and employees:

  • Expanded Family and Medical Leave – which provides for a new type of paid FMLA leave.
  • Emergency Paid Sick Leave – which provides for a new type of paid sick days benefit.

This update will focus on the areas clarified by the DOL that have been the most confusing for employers.

Effective Dates – The law goes into effect on April 1, 2020 and does not apply retroactively. Employees who experienced a job loss or loss of wages and hours prior to this date (layoff or furlough) would not be eligible for FFCRA as the law requires being currently employed on the date it becomes effective.

 Exemptions

  • Employers with Fewer than 50 Employees who can establish that compliance would jeopardize the viability of the business can be exempt from the FFCRA but ONLY for Paid Sick Leave or Extended Family Medical Leave for employees requesting time off due to the unavailability of children’s schools or childcare. This is a huge and surprising clarification from the DOL and means that no employers are exempt from providing Paid Sick Leave for employees with a COVID-19 related illness or quarantine for themselves or family members.

To claim this exemption, an authorized officer of the company would need to establish that:

  • Providing the FFCRA paid time off would cause the business’s expenses and financial obligations to exceed available revenues and cause the company to cease operating at minimal capacity; OR
  • The absence of the employee(s) asking for FFCRA paid time off would entail a substantial risk to the financial health or operational capabilities of the business because of their specialized skills, knowledge of the business, or responsibilities; OR
  • There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee(s) requesting FFCRA paid time off, and these labor or services are needed for the business to operate at a minimal capacity.
  • Emergency Responders and Health Care Providers do not have to be provided FFCRA paid time off. For details about which types of employees would meet these definitions, see the DOL’s Q&As.

Business Closures – For any businesses that close prior to 4/1/20 due to “lack of work” or because the business “was required to close pursuant to a Federal, State, or local directive,” impacted employees would not be eligible for FFCRA paid time. For businesses that close after that date, employees would need to be paid for any FFCRA paid time to which they were entitled prior to the closure but not after. While still not 100% clear, this language appears to suggest that employees who are sent home and unable to telework due to a “Stay at Home” order or other similar directive would not qualify for FFCRA paid time off.

Furloughs – If employees are furloughed, they are not eligible for FFCRA paid time during their hiatus from work. Should they return to work, they would again be eligible.

Reduced Work Hours – If employees’ work hours are reduced due to lack of work, they are not eligible for FFCRA paid time because they are not prevented from working due to a COVID-19 qualifying reason, even if the reduction in hours is related to COVID-19. However, if employees need to work a reduced schedule due to one of the qualifying reasons, the amount of paid time off to which they would be entitled would be calculated based on their work schedule prior to the hours being reduced.

Recordkeeping and Notices

  • Employers who will be seeking reimbursement for these paid benefits through refundable tax credits should keep track of exactly what is paid to employees and will be provided additional instructions from the IRS. Our recommendation is to create distinct earning codes in your payroll system so that any FFCRA paid time does not get commingled with other paid leave offered by the employer such as PTO or other paid sick days.
  • Employees who take Expanded Family and Medical Leave to care for children can be required to provide documentation attesting to the fact that school or childcare is unavailable to due COVID-19. Such documentation could include notices, emails, texts, or even newspaper or online publishing from the school or day care.
  • For all other leaves under FMLA, the existing notice and certification requirements remain unchanged.

Teleworking – If employees are permitted to telework during the pandemic and are paid their normal wages, they are not eligible for FFCRA paid time. If during teleworking they become unable to work, paid time off would be available as long the inability to work meets one of the qualifying reasons under the law.

Intermittent Work while Teleworking – Employees can use FFCRA paid time intermittently if they are not able to work their full schedule due to a qualifying reason as long as the employer agrees. Employers are allowed to determine the increments in which the FFCRA paid time may be taken and are being encouraged to be as flexible as possible.

Intermittent Work while Working at the Regular Job Site – Paid Sick Leave for those working at their regular job sites must be taken in full-day increments if the leave is needed due to the employee being quarantined, having been advised to self -quarantine, is experiencing COVID-19 symptoms, or is caring for another who is in one of these situations. The employee would need to take Paid Sick Leave either until the full amount of leave has been used or the qualifying reason to take leave no longer exists. If the full amount of leave is not taken, it can be used again for another qualifying reason prior to 12/31/20. For example, if an employee needs to take 5 days off due to a personal quarantine order and is then medically released to return to work, he/she would use up 5 full days of FFCRA and still have 5 days remaining for use at a later time. If the employee needs to take Paid Sick Leave or Paid Expanded Family and Medical Leave to care for children, it may be taken intermittently as long as the employer agrees to the schedule – even if in increments of less than a full day.

Partial Unemployment – While most states have their own unique programs for employees who experience some form of partial loss of wages (vs. full unemployment), the DOL has recently provided additional flexibility to the state programs for extending partial benefits. As employers really cannot predict or promise how unemployment benefits will be determined by their state agencies, they should encourage any employee who might qualify to apply for benefits.

Health Benefits – Employers must continue group health insurance benefits to employees taking Paid Sick Leave or Extended Family Medical Leave under the same terms and conditions. Employees may be required to continue to make their contributions towards these coverages. If employees are unable to return to work, depending upon the terms and conditions of your medical insurance plan, employees might have to be terminated from the plan and made eligible for COBRA or state “mini-COBRA” benefits. However, during these challenging times, most insurance carriers are allowing more flexibility for keeping employees covered in circumstances when they might ordinarily have lost coverage. We highly recommend checking with your own broker or insurance company. Any time taken off under FFCRA will be considered the same as hours worked for purposes of meeting eligibility requirements under group health insurance plans.

Supplementing Paid FFCRA – While employees are not entitled and cannot be forced to use any other type of paid leave provided by the employer to supplement FFCRA paid time, employers are free to allow this option. For example, employees who are only receiving 2/3 of their regular wages or who have maxed out on the daily or cumulative caps might want to use existing PTO benefits to make up the missing wages. Likewise, an employer is permitted to simply pay the employees to make up any difference. Either form of supplemental wages would not be subject to the reimbursement provisions via tax credits that apply for FFCRA paid time.

Existing Time Off Policies – Employers who already provide any type of paid time off benefits such as vacation, sick, or PTO are not permitted to use these benefits to offset their obligation to provide paid FFCRA time.

Coordination with “Regular” FMLA Leave:

  • Paid Sick Leave – Employees who have a qualifying reason to take Paid Sick Leave are eligible for the full paid time off regardless of any prior FMLA taken before 4/1/20 as Paid Sick Leave is not considered a type of FMLA leave.
  • Emergency Family Medical Leave – If the employer was covered by FMLA prior to 4/1/20, any time taken off by an employee for a different FMLA leave will impact the amount of time available for Emergency Family Medical Leave. Using the regular method that the employer has adopted for tracking their FMLA 12-month period, prior time taken in the current year will be deducted from the total 12-week allowance. For example, an employee who previously used 6 weeks of FMLA due to his/her own serious medical condition or to care for a family member, would only have 6 weeks remaining in this year for Emergency Family Medical Leave. Likewise, an employee who takes less than a full 12 weeks of Emergency Family Medical Leave between now and 12/31/20, could potentially use the remaining 6 weeks of total leave allowed under FMLA for another qualifying (non COVID-19) reason during the remainder of the employer’s established 12-month period.

Mandatory Notice

  • GET YOUR COPY HERE: Employee Rights under the Families First Coronavirus Response Act
  • This notice must be posted at your place of business in a conspicuous place. Employers are permitted to mail or email the notice directly to employees or post on their company website.
  • NOTE that even small businesses who intend to take the limited exemption for providing FFCRA paid time off in childcare situations must still distribute this notice as Paid Sick leave for other purposes will still apply.

More Questions – We all still have so many more questions on this new law but are hopeful that the promised regulations will answer them. In the meantime, please reach out to us at Vantaggio for help understanding this new, complex law and or any assistance with what this means for your specific circumstances and staff.

Call: 877-VHR-RELX

Email: info@vantaggioHR.com

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MANDATORY NOTICE FOR EMPLOYEES 03/25/2020 https://vantaggiohr.com/vhr-insights/mandatory-notice-employees/ https://vantaggiohr.com/vhr-insights/mandatory-notice-employees/#comments Wed, 25 Mar 2020 22:28:21 +0000 https://vantaggiohr.com/?p=1869 MANDATORY NOTICE FOR EMPLOYEES Families First Coronavirus Response Act On March 24, 2020 the US Dept of Labor issued Q&As on the Families First Coronavirus Response Act (see our original blog post:  Urgent HR Law COVID-19) pending publishing of formal regulations and published a mandatory notice that must be provided to all employees. As a reminder, the bill provided for a number of relief actions; however, this update will focus on the 2 directly related to employers and employees: Expanded Family and Medical Leave – which provides for a new type of paid FMLA leave. Emergency Paid Sick Leave – which provides for a new type of paid sick days benefit. Effective Dates – Although we originally expected the laws to take effect on April 2, both will be in effect on April 1, 2020. Employer Coverage – As the laws apply to companies with fewer than 500 employees, how do employers assess their headcount? At the time the leave is taken, you count all full time and part-time employees within the US including territories and possessions. All employees count – those on leave, temporary employees jointly employed by you and another entity, day laborers through a temp agency. True independent contractors may be excluded. A corporation and all its separate establishments and divisions are considered one single employer. For a corporation with an ownership interest in another corporation, both would be separate employers unless considered a “joint employer” under the Federal Fair Labor Standards Act in which case both groups of employees would be counted. Other related entities will be considered separate employers unless they meet the “integrated employer” test under the Federal Family Medical Leave Act. Exemptions – The laws allow employers with fewer than 50 employees to be exempt if compliance would jeopardize the viability of the […]

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MANDATORY NOTICE FOR EMPLOYEES

Families First Coronavirus Response Act

On March 24, 2020 the US Dept of Labor issued Q&As on the Families First Coronavirus Response Act (see our original blog post:  Urgent HR Law COVID-19) pending publishing of formal regulations and published a mandatory notice that must be provided to all employees.

As a reminder, the bill provided for a number of relief actions; however, this update will focus on the 2 directly related to employers and employees:

  • Expanded Family and Medical Leave – which provides for a new type of paid FMLA leave.
  • Emergency Paid Sick Leave – which provides for a new type of paid sick days benefit.

Effective Dates – Although we originally expected the laws to take effect on April 2, both will be in effect on April 1, 2020.

Employer Coverage – As the laws apply to companies with fewer than 500 employees, how do employers assess their headcount?

  • At the time the leave is taken, you count all full time and part-time employees within the US including territories and possessions.
  • All employees count – those on leave, temporary employees jointly employed by you and another entity, day laborers through a temp agency. True independent contractors may be excluded.
  • A corporation and all its separate establishments and divisions are considered one single employer.
  • For a corporation with an ownership interest in another corporation, both would be separate employers unless considered a “joint employer” under the Federal Fair Labor Standards Act in which case both groups of employees would be counted.
  • Other related entities will be considered separate employers unless they meet the “integrated employer” test under the Federal Family Medical Leave Act.

Exemptions – The laws allow employers with fewer than 50 employees to be exempt if compliance would jeopardize the viability of the business. We’ve had many, many questions asking for details about how such an exemption would be obtained. For now, the DOL advises businesses to document why your business would meet the criteria and have promised more details in the upcoming regulations. They have asked that no one send any information at the current time to the DOL.

Pay During Emergency Paid Sick Leave

  • When calculating pay for hourly employees, any overtime the employee would normally have been scheduled to work must be included even if the total weekly hours is over 40; however, the premium portion of overtime may be excluded. For example, an employee who typically works a 50-hour workweek with 40 hours paid at straight time and 10 hours paid at time and a half, would get 50 hours of emergency paid sick leave paid at straight time for that week.
  • The total number of hours that an employee is entitled to for emergency paid sick leave is still 80 hours for full-time employees and a pro-rated amount for part-time. In the example above, the employee who got 50 hours in his/her first week of leave would only have 30 left in the second week.

Regular Rate of Pay – Both types of leaves must use an hourly employee’s “regular rate of pay” when calculating pay. For purposes of FFCRA this will be the average of the employee’s regular rate over a period of up to 6 months prior to the date on which the leave commences. Keep in mind that the regular rate of pay must factor in all additional forms of non-discretionary compensation such as commissions, tips, piece rates, etc.

Multiple Reasons to use Emergency Paid Sick Leave – If an employee takes 80 hours of emergency paid sick leave for one permissible reason such as caring for him/herself due to being ill with COVID-19, the person will have exhausted all available leave and would not be entitled to another 80 hours even if there is then another qualifying reason to take leave such as caring for a quarantined family member.

Coordination of Extended FMLA and Emergency Paid Sick Leave – Extended FMLA is available for up to 12 weeks if an employee cannot work or “telework” due to needing to care for a child whose school or childcare is not available due to COVID-19. The first 10 days of this leave would be unpaid during which time the employee could use existing sick or PTO but could also use the new Emergency Paid Sick days. Using any other paid time off available during these initial 10 days does not increase the maximum about of time off of 12 weeks.

Mandatory Notice

  • GET YOUR COPY HERE: Employee Rights under the Families First Coronavirus Response Act
  • This notice must be posted at your place of business in a conspicuous place. Employers are permitted to mail or email the notice directly to employees or post on their company website.
  • Additional language versions are being developed but are not yet available and are not required.

More Questions – We all still have so many more questions on this new law but are hopeful that the promised regulations will answer them. In the meantime, please reach out to us at Vantaggio for help understanding this new, complex law and or any assistance with what this means for your specific circumstances and staff.

Call: 877-VHR-RELX

Email: info@vantaggioHR.com

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URGENT HR LAW COVID-19 UPDATE 03/19/2020 https://vantaggiohr.com/industry-news/urgent-hr-covid-19-update-03192020/ https://vantaggiohr.com/industry-news/urgent-hr-covid-19-update-03192020/#comments Thu, 19 Mar 2020 19:44:10 +0000 https://vantaggiohr.com/?p=1847 URGENT HR LAW COVID-19 UPDATE 03/19/2020 Vantaggio HR will be providing a series of regular HR updates to our valued clients and colleagues during these very uncertain times. We know that many of you have questions about the many changes in government policy and how they can affect the current state and future of your business and what that means for your employees. We’re here to help. Today’s update will focus on the new federal Families First Coronavirus Response Act, signed into law by the President last night. Please note that the final version of the law differs in important areas from the version passed a few days ago by the House. There are a lot of articles on the web that may cause confusion. While the bill provides for a number of relief actions, this update will focus on the 2 directly related to employers and employees: Emergency Family and Medical Leave Act – which provides for a new type of paid FMLA leave. Emergency Paid Sick Leave Act – which provides for a new type of paid sick days benefit. Effective Dates – Both acts take effect on April 2, 2020 and remain in effect through December 31, 2020. Employer Coverage – Both acts apply to all private businesses in the United States with fewer than 500 employees. Exemptions – Both acts allow: Employers of employees who are healthcare providers or emergency responders to exclude such employees from coverage. The Secretary of Labor to issue regulations that would: Exclude certain healthcare providers or emergency responders from the definition of employees under the act Exempt small businesses with fewer than 50 employees if compliance would jeopardize the viability of the business. Note that we have no further information at the current time about how such exemptions would be requested […]

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URGENT HR LAW COVID-19 UPDATE 03/19/2020

Vantaggio HR will be providing a series of regular HR updates to our valued clients and colleagues during these very uncertain times. We know that many of you have questions about the many changes in government policy and how they can affect the current state and future of your business and what that means for your employees. We’re here to help.

Today’s update will focus on the new federal Families First Coronavirus Response Act, signed into law by the President last night. Please note that the final version of the law differs in important areas from the version passed a few days ago by the House. There are a lot of articles on the web that may cause confusion.

While the bill provides for a number of relief actions, this update will focus on the 2 directly related to employers and employees:

  • Emergency Family and Medical Leave Act – which provides for a new type of paid FMLA leave.
  • Emergency Paid Sick Leave Act – which provides for a new type of paid sick days benefit.

Effective Dates – Both acts take effect on April 2, 2020 and remain in effect through December 31, 2020.

Employer Coverage – Both acts apply to all private businesses in the United States with fewer than 500 employees.

Exemptions – Both acts allow:

  • Employers of employees who are healthcare providers or emergency responders to exclude such employees from coverage.
  • The Secretary of Labor to issue regulations that would:
    • Exclude certain healthcare providers or emergency responders from the definition of employees under the act
    • Exempt small businesses with fewer than 50 employees if compliance would jeopardize the viability of the business.

Note that we have no further information at the current time about how such exemptions would be requested or approved.

Tax Credits – The cost for providing the benefits under these acts will be reimbursed to employers by the federal government through credits that the employer will receive against their Social Security and Medicare tax liabilities. Additionally, these reimbursements can be “grossed up” to include a share of the employees’ health insurance costs associated with the paid time off provided.

Note there is also a formula available for similar credits for certain self-employed individuals.

Notices – Both acts require the posting of notices that will be developed by the Department of Labor. With regards to other notices and certifications required under FMLA and other legally mandated paid sick leave, we have no further information at the current time.

Employee Protections – Both acts prohibit employers from disciplining, discharging, or discriminating against employees who exercise their rights to these benefits.

Emergency Family and Medical Leave Act

  • Employee Eligibility – Applies to any employee working for a covered employer for at least 30 days (unlike “regular” FMLA leave which is available only to employees with 1250 hours and 12 months of prior service at a work location with 50 or more employees in a 75-mile radius).
  • Reason to Take Leave – Employees who are unable to work or “telework” due to the need to care for a son or daughter under 18 years of age whose school is closed or whose childcare is unavailable as a result of a public health emergency. This is the only reason to take FMLA leave and does not cover individuals who are ill or are caring for others who ill due to COVID-19.
  • Duration of Leave – up to 12 weeks.
  • Pay During Leave:
    • First 10 Days – are allowed to be unpaid. Employees may choose, but the employer may not require, use of existing paid time off such as vacation, sick, or PTO.
    • Remainder of Leave – The employee must be paid by the employer:
      • 2/3 of the employee’s regular wages
      • Up to a maximum of $200 per day and an aggregate maximum of $10,000
      • Part time employees – must be paid at FLSA regular rate of pay times the number of hours the employee would normally have been scheduled to work. Special rules apply for employees with varying schedules.
  • Job Restoration – Similar to “regular” FMLA leaves, employees are entitled to be returned to the same or a “substantially similar” position. However, the bill does provide for relief from guaranteed job restoration for certain employers with fewer than 25 employees if specific conditions are met.
  • Notice – Employees can be required to provide advance notice to the employer when practicable.

Emergency Paid Sick Leave Act

  • Reason to Take Leave – Employees who are unable to work or “telework” due to one of the following reasons:
    • 1- The employee is subject to quarantine due to COVID-19;
    • 2- The employee has been advised by a healthcare provider to self quarantine due to COVID-19;
    • 3- The employee is experiencing symptoms and is seeking medical care;
    • 4- The employee is caring for an individual (that does not have to be a family member) who is experiencing either #1 or #2 above;
    • 5- The employee is caring for a son or daughter whose school is closed or whose childcare is unavailable due to COVID-19;
    • 6- The employee is experiencing other substantially similar conditions as specified by the Secretary of Health and Human Services
  • Employee Eligibility– Applies to any employee working for a covered employer with no length of service requirement.
  • Amount of Paid Time Off:
    • Full Time Employees – 80 hours
    • Part Time Employees – the average number of hours the employee works in a 2-week period. Special rules apply for employees with varying schedules.
    • Benefits do not rollover or carry over and cease after the need for the leave goes away.
    • Employees cannot be required to find coverage for their shifts if they are absent.
    • Employers may not require the use of other paid time off such as sick, vacation, or PTO prior to using Emergency Paid Sick Days.
    • While the prior version of the bill made it clear that the entitlement to these new Paid Sick Days was in addition to any other paid time off currently required by law or offered by the employer, the final bill remained silent on this issue. At Vantaggio, out of an abundance of caution, we are presuming that other paid time off could not be used to meet these new requirements.
  • How Pay is Determined:
    • If an employee takes time off for his/her own health situation under #1, #2, or #3 above, the employee is to be paid
    • 100% of his/her regular wages
    • Not to exceed $511 per day and an aggregate maximum of $5,110
  • If an employee takes time off under #4, #5, or #6 above, the employee is to be paid
    • 2/3 of his/her regular wages
    • Not to exceed $200 per day and an aggregate maximum of $2,000
    • No less than minimum wage at the employee’s location

These new laws will require a lot of internal administration and interpretation as we’re awaiting further guidance.

Please reach out to any of us at Vantaggio if you need help with getting quickly in compliance. We’re here to support you.

Call: 877-VHR-RELX

Email: info@vantaggioHR.com

 

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2020 Employment Law Updates for California https://vantaggiohr.com/vhr-insights/2020-elu-california/ https://vantaggiohr.com/vhr-insights/2020-elu-california/#respond Thu, 12 Dec 2019 20:22:11 +0000 https://vantaggiohr.com/?p=1788 A new year, and a new Governor! And while California is used to changing employment-related legislation each year, 2020 will prove to see some unprecedented changes. New rules regarding Independent Contractors that even professionals find complex – Arbitration Agreements being deemed unlawful, increasingly detailed Lactation Accommodation requirements, new Hairstyle Discrimination protections, and amendments to Sexual Harassment Prevention Training requirements. 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, will go into effect on 1/1/20: Independent Contractors In 2018, the California Supreme Court’s decision in the Dynamex case created a strict 3-prong test for determining independent contractor vs. employee status under California’s wage and hour laws. 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 prongs A and C were not new concepts to the analysis, prong B was a “bear” for many employers who questioned if this was now the death of the freelance industry in California. This year, AB 5 was signed into law. While the original intent of the bill was to codify the Dynamex decision into the California Labor Code, after some very effective lobbying by special industry groups, AB 5 ended up creating a bit of a quagmire for employees. While the ABC test is now in fact incorporated in the labor code, the […]

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A new year, and a new Governor! And while California is used to changing employment-related legislation each year, 2020 will prove to see some unprecedented changes. New rules regarding Independent Contractors that even professionals find complex – Arbitration Agreements being deemed unlawful, increasingly detailed Lactation Accommodation requirements, new Hairstyle Discrimination protections, and amendments to Sexual Harassment Prevention Training requirements.

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, will go into effect on 1/1/20:

Independent Contractors

In 2018, the California Supreme Court’s decision in the Dynamex case created a strict 3-prong test for determining independent contractor vs. employee status under California’s wage and hour laws. 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 prongs A and C were not new concepts to the analysis, prong B was a “bear” for many employers who questioned if this was now the death of the freelance industry in California.

This year, AB 5 was signed into law. While the original intent of the bill was to codify the Dynamex decision into the California Labor Code, after some very effective lobbying by special industry groups, AB 5 ended up creating a bit of a quagmire for employees. While the ABC test is now in fact incorporated in the labor code, the bill created a number of special exceptions. Notably, certain, specific occupations are now exempt from the ABC test as well as certain business relationships including certain Business to Business arrangements, certain Professional Services relationships, and certain subcontractors in the construction industry. To be eligible for these exemptions, each type of relationship is subject to specific definitions of the terms used in the bill as well as multi-prong tests of their own. And beware, being exempt from AB 5 does not ensure independent contractor status, it simply means that instead of using the “new” ABC test, the exempt relationships must go back to using a longer, more flexible test from a prior California case called the “Borello” test. And surprisingly, AB 5 says that if an employer converted an independent contractor into an employee after 1/1/19 based on the Dynamex case and he/she might now actually meet the definition given the new exemptions, that employer is prohibited from converting the person back into an independent contractor.

Now, more than ever, this is a complicated subject for employees who really need to seek qualified guidance as the risks and penalties can be quite costly and severe.

Arbitration Agreements

Many employers utilize mandatory agreements to arbitrate disputes with their employees. AB 51 will prohibit employers from requiring any applicant or employee from entering into new arbitration agreements or from having to sign a modified or extended agreement. It will further make actionable any threatened or actual retaliation against an individual who refuses to consent to the new prohibitions. A similar bill was vetoed last year by our prior Governor, based on its likely preemption by the Federal Arbitration Act and potential to be found unconstitutional. That being said, this bill becomes law in California on 1/1/20, and many expect years of legislation before the law’s legality is decided upon. Employers in California need to assess the risk of continuing to utilize such agreements going forward and should consult with experienced legal counsel if wanting to do so.

Arbitration Agreement Costs

SB 707 will require an employer to pay the costs and fees associated with an arbitration. Failure to do so will cause the agreement to be breached and allow the employee to withdraw the claim from arbitration and be entitled to attorney’s fees and costs.

Lactation Accommodation

Over the past several years, California has passed several laws expanding the requirements for employers to provide lactation accommodations to employees who need to express breastmilk during the workday. Last year, AB 1976 required employers to provide a location that is something other than a bathroom, should be close to the employee’s work area, and should generally be a permanent location only used for such purposes. It also spelled out the conditions under which a temporary location would be allowed.

This year, SB 142 takes the requirements even further. Patterned after a similar San Francisco bill (and a repeat from a bill last year that was vetoed by the Governor for presumably being too onerous), California employers must now ensure that in addition to the above, the location needs to be shielded from view; be free from intrusion while the employee is lactating; be safe, clean, and free from hazardous materials; contain a surface on which to place a breast pump and other items; contain a place to sit; have access to electricity or alternative devices needed to operate an electric or battery operated pump (such as extension cords, charging stations); and provide access to a sink with running water and a refrigerator for storing breastmilk. If a refrigerator cannot be provided, the employer may provide another cooling device such as a cooler. If a room used for other purposes will be utilized for lactation, the lactation activities need to take precedence. Employers in multitenant buildings or worksites are permitted to share a lactation space if unable to do so in their own workspace. Employers with fewer than 50 employees may be exempt from certain of these requirements if they can show undue hardship.

Further, the bill makes denying someone the necessary break time to lactate and/or an appropriate location for lactation a violation of California rest break laws and subjects the employer to a penalty of $100 per day of the violation.

Employers must also develop and disseminate a written lactation accommodation policy that contains specific language and must be included in the employee handbook, be provided to all new hires, and be given to any employee inquiring about parental leave.

Hairstyle Discrimination

Feeling that our business community has promulgated “Eurocentric” norms for professional grooming standards, the California legislature passed SB 188, referred to as the “Crown Act” (Creating a Respectful and Open Workplace for Natural Hair). The Fair Employment and Housing Act (FEHA) currently prohibits discrimination based on certain protected categories that include race. This bill expands the definition of race to include traits historically associated with race, including but not limited to, hair texture and protective hairstyles – listing specifically afros, braids, twists, and locks. Given this new legislation, employers should review company dress and grooming policies and practices to ensure compliance.

Sexual Harassment Prevention Training

Last year, SB 1343 expanded the requirements for mandated sexual harassment training for California employers. Prior law required employers with 50 or more employees (total headcount includes temporary and seasonal staff and all employees anywhere in the U.S.) to provide 2 hours of specified curriculum to their California supervisors and managers every 2 years. SB 1343 expanded the training requirements to employers with 5 or more employees who will now be required to train ALL California employees at least bi-annually. Originally, employers had until 1/1/20 to get these new training requirements met, but due to an outcry from the business community, the Governor signed SB 778 in August as an emergency piece of legislation, extending the training deadline to 1/1/21. The new law stipulates that an employer who already provided the training after 1/1/19 will not be required to provide it again until 2 years thereafter.

Supervisors and managers will still be required to attend 2 hours of training and non-supervisory staff 1 hour. All employees must receive their respective training within 6 months of assumption of a position. Seasonal, temporary, or any other worker hired to work for less than 6 months must be trained within 30 calendar days of beginning work or within 100 hours worked, whichever occurs first. While the required curriculum has not changed, SB 1300 from last year introduced the concept of “bystander intervention training” and encouraged employers to address the tendency for people to remain silent and refrain from providing assistance or coming forward when they witness harassment of others.

In-person training is not required, but post the #Me-Too movement, many employers are embracing these training requirements as an opportunity to encourage open and honest communication in the workplace about an uncomfortable topic – something that won’t happen if people are trained via webinar. Remember that these trainings have a specific, required curriculum and must be provided by trainers with knowledge and expertise in all of the covered topics.

Organ Donation Leave

Existing law requires employers with 15 or more employees to provide a PAID leave of absence of 30 days for employees who donate an organ and 5 days for those who donate bone marrow. AB 1223 will require employers, effective 1/1/20, to provide an additional 30 days of UNPAID leave for employees who donate an organ.

Paid Family Leave

Existing law provides for up to 6 weeks of wage replacement benefits for employees who need to take time off to care for an ill child, spouse, parent, grandparent, sibling, or domestic partner; or to bond with newborn babies or newly adopted children. Effective 7/1/20, SB 83, yet another new California law patterned after San Francisco’s unique employment laws, expands Paid Family Leave benefits to a maximum of 8 weeks and creates a task force to explore expanding the benefits up to potentially 6 months. Employers need to remember that while a form of wage replacement, Paid Family Leave does not provide any actual leave entitlement or job protection to employees which would instead be dictated either by company policy and/or state mandated leave laws such as California Family Rights Act (CFRA) or New Parent Leave Act (NPLA).

Reporting of Workplace Accidents/Injuries

Existing law requires employers to file reports of occupational injuries or illnesses that result in lost time beyond the date of the injury or illness and require more than first aid with the Department of Industrial Relations (DIR) via completion of a form. Serious injuries, illnesses, or deaths must be reported immediately by phone or email. SB 1804 will require employers to report serious injuries, illnesses, or deaths immediately either via phone or through an online platform that will be developed by the DIR. Failure to comply will result in a $5,000 penalty.

“No Rehire” Clauses in Settlement Agreement

It has been common practice for separation agreements to contain “no rehire” provisions by which a terminating employee and the employer agree that the employee will not be eligible to seek future employment with the employer. SB 749 will make such clauses illegal, except in situations where the employer has made a good faith determination that the employee has engaged in sexual assault or sexual harassment.

Civil Actions: Damages

Gender, Race, Ethnicity. Existing law allows a person who suffers a loss or harm from an unlawful act to recover damages from the person at fault. SB 41 would provide that such damages resulting from personal injury or wrongful death cases could not be reduced based on race, ethnicity, or gender.

DFEH Claims

Another repeat bill which was vetoed by the Governor last year, AB 9 extends the period of time within which an employee may file a complaint with the Department of Fair Employment and Housing (DFEH) from 1 year to 3 years.

Labor Commissioner Complaints

SB 229 expands the California Labor Commissioner’s mechanisms for enforcing anti-retaliation violations of the Labor Code and provides for procedures to be followed when adjudicating or contesting a citation. It further expands the Labor Commissioner’s authority to issue citations when employees are paid below an amount stipulated in a contract even if the contractual amount is above minimum wage.

Late Payment of Wages Penalties

Current law provides for civil penalties when an employee’s final wages are late, allowing the Labor Commissioner to recover the penalties as part of a hearing in an independent civil action. A percentage of the penalty recovered must be paid into the state. Under AB 673, individual employees will now be able to recover penalties for wages directly under the Private Attorney General Act (PAGA), removing the Labor Commissioner’s authority to recover civil penalties. Under the new law, employees will, however, have to choose between a private civil action, an administrative action with the Labor Commissioner, or a claim under PAGA.

Consumer Privacy Act

The Governor signed several amendments to the California Consumer Privacy Act (CCPA) which will have an impact on employers doing business in California. AB 25 postpones most of the requirements related to employee data until 1/1/21 with the exception of requiring employers to 1. provide reasonable security measures to safeguard employee data and 2. disclose the categories of personal information collected about employees and job applicants and the business reasons for which this data will be used. AB 1355 excludes from coverage under the CPA certain business to business communications or transactions. Note that the CCPA has a broad territorial reach and is not limited only to businesses in California. The topic, in general, is complex, and compliance with the vast changes will be challenging and require legal guidance. For more information, here is an informative article by our colleagues at Troutman Sanders: https://www.troutman.com/insights/california-governor-signs-ccpa-amendments-into-law.html

Workplace Violence Gun Restraining Orders

Existing law allows immediate family members and law enforcement personnel to petition courts for a gun violence restraining order to prohibit an individual from having access to firearms if there is a substantial likelihood of danger to oneself or others. AB 61 will allow employers, certain co-workers, and certain teachers to petition for a gun violence restraining order.

Domestic Partnerships

Existing law allows for 2 adults of the same sex or 2 adults of the opposite sex over the age of 62 to enter into a formal domestic partnership. SB 30 removes the age restriction, allowing any 2 adults over the age of 18 to become domestic partners.

Female Members of Boards of Directors

As a reminder, last year, SB 826 provided for the mandatory inclusion of women on corporate boards of directors. No later than the end of 2019, publicly held domestic or foreign corporations with principal corporate offices in California had to have a minimum of 1 female on its board of directors. By the end of 2021, the number of required females will increase to 2 if the corporation has a total of 5 directors, and 3 if the corporation has 6 or more directors. If you have not yet met this obligation, time is running out!

Minimum Wage and Exemptions

Although SB 3 passed in 2016, it provided for an annual increase in our minimum wage. Effective 1/1/20, for employers with 25 or fewer employees, the new minimum wage is $12.00 per hour. For employers with 26 or more employees, the new minimum wage is $13.00 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 $49,920 or $54,080 per year.

Additionally, minimum wage has an impact on determining if insides sales employees are exempt and when certain trade employees can be required to provide their own hand tools. Also, keep in mind that close to 30 different cities and other municipalities in California have their own minimum wage ordinances.

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

Other California Developments:

Call-In Pay for Phoning In

A California Court of Appeal, in Ward v. Tilly’s, Inc held that employees who were required to check into work via phone to see if they would be needed for a schedule shift but who are told not to report to work were due “reporting time pay.” Historically, if an employee showed up for work and was then sent home or only provide a partial day of work, he/she was entitled to pay for one half of the regularly scheduled hours that were expected to be worked – with a minimum due of 2 hours and a maximum due of 4 hours. In the case at hand, the court found that requiring the employees to remain available and to phone in to see if they were in fact needed amounted to the same thing as having the employee show up at work and declared that the employees were due reporting time pay on these occasions. Of note in this case, the employer required the employees to call 2 hours ahead of the anticipated shift start time. It remains to be seen if allowing the employee to call in further in advance would make a difference. Any employers with call-in practices should evaluate current policy and speak to experienced employment counsel.

Posters

In addition to new minimum wages, the DFEH is expected to make changes to their anti- discrimination poster based on the new Crown Act. If you need to order new 2020 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:

Federal DOL Salary Level for Exempt Employees

If you remember, back in 2016, the Federal DOL had attempted to increase the salary threshold required for white-collar workers to be considered exempt from overtime rules from $455 per week ($23,660 per year) to $916 per week ($47,476 per year). The rule was ultimately blocked by a Federal judge in Texas before taking effect and then appealed, but the appeal was held in abeyance pending the DOL working on a revised plan. After much consideration and analysis, on 9/24/19, the DOL announced its new final rule that will go into effect on 1/1/20. The standard salary level required for “white collar” exemptions will be $684 per week ($35,568 per year) and the annual compensation required for “highly compensated employees” goes up from $100,000 per year to $107,432 per year. Nondiscretionary bonuses and incentive pay (including commissions) paid at least annually are allowed to satisfy up to 10% of the salary requirements.

NOTE: The current salary requirements for exempt status in California are in excess of the Federal levels. As such, for California employees, the minimum salary threshold of 2 x $12.00 or $13.00 per hour must be met. Also be aware that under California law, there is no “highly compensated” exemption.

What should employers do?

  • Audit all of your current Independent Contractor relationships to ensure that they meet the new legal requirements. Reclassify anyone who doesn’t as an employee.
  • Cease entering into mandatory Arbitration Agreements with employees after 1/1/20 and seek legal counsel on the subject. Be sure your current agreements contain the necessary language about payment responsibility and that you pay the associated cost and fees for arbitration in a timely manner.
  • Ensure that you are able to provide a compliant Lactation Location for employees and that the appropriate lactation breaks are provided.
  • Draft a compliant Lactation Accommodation policy and disseminate to new hires, publish in your handbook, and provide to all employees inquiring about parental leave.
  • Update Employee Handbooks for: dress code policies, lactation accommodation, organ donation, paid family leave, other.
  • Schedule all of your employees to attend Sexual Harassment Prevention Training prior to 1/1/20.
  • Train those responsible for safety compliance about new Workplace Accident/Injury Reporting.
  • Review Separation Agreements to remove No Rehire clauses.
  • Be diligent about Recordkeeping given that employees now have 3 years to file complaints with the DFEH.
  • Audit payroll practices to ensure Timely Payment of Wages due to the increased likelihood of penalties.
  • Ensure all employees are being paid the correct 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 your Boards of Directors have the required number of Female Board Members.
  • Ensure your Call-In practices meet the new legal obligations and that employees are being paid the appropriate Reporting Time Pay.
  • Obtain and post your new 2020 Employment Posters.
  • Talk to your attorney to get guidance on compliance with the California Consumer Privacy Act.

Book your All Employee Sexual Harassment Prevention Training before 12/31/19 and save $500! And remember, relax™ – We Take the Stress out of HR™!

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2019 Employment Law Updates for California https://vantaggiohr.com/vhr-insights/2019-employment-law-updates-california/ https://vantaggiohr.com/vhr-insights/2019-employment-law-updates-california/#respond Fri, 25 Jan 2019 15:17:54 +0000 https://vantaggiohr.com/?p=1709 Each year, employers await the new changes that our legislators make in the area of employment law which impact the way we do business in California. This year, Governor Brown, while vetoing a number of bills that surprised many of us, did sign a raft of legislation brought on by the #Me Too movement. Of note, CA employers are no longer able to enter into Non-Disclosure Agreements involving claims of sexual assault, harassment, or discrimination; will be required to increase the Sexual Harassment Training efforts; and will be restricted from entering into certain Settlement Agreements related to harassment and discrimination. Additionally, we have new Lactation Accommodation rules, clarification about inquiries regarding Salary Expectations from candidates; and a ground-breaking new requirement for business to install Female Corporate Board Members. 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 1/1/19: Minimum Wage and Exemptions – Although SB 3 passed in 2016, effective 1/1/19, we had our next scheduled minimum wage increase. For employers with 25 or fewer employees, the new minimum wage is $11.00 per hour. For employers with 26 or more employees, the new minimum wage is $12.00 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 $45,760 or $49,920 per year. Additionally, minimum wage has an impact on […]

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Each year, employers await the new changes that our legislators make in the area of employment law which impact the way we do business in California. This year, Governor Brown, while vetoing a number of bills that surprised many of us, did sign a raft of legislation brought on by the #Me Too movement. Of note, CA employers are no longer able to enter into Non-Disclosure Agreements involving claims of sexual assault, harassment, or discrimination; will be required to increase the Sexual Harassment Training efforts; and will be restricted from entering into certain Settlement Agreements related to harassment and discrimination. Additionally, we have new Lactation Accommodation rules, clarification about inquiries regarding Salary Expectations from candidates; and a ground-breaking new requirement for business to install Female Corporate Board Members.

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 1/1/19:

Minimum Wage and Exemptions – Although SB 3 passed in 2016, effective 1/1/19, we had our next scheduled minimum wage increase. For employers with 25 or fewer employees, the new minimum wage is $11.00 per hour. For employers with 26 or more employees, the new minimum wage is $12.00 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 $45,760 or $49,920 per year.

Additionally, minimum wage has an impact on determining if insides sales employees are exempt and 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.

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

Sexual Harassment DisclosuresAB 3109 makes any provision in a contract or settlement agreement void and unenforceable if it waives a person’s right to testify in an administrative, legislative, or judicial proceeding concerning criminal conduct or sexual harassment.

Sexual Harassment OffendersAB 224 amends the California Civil Code to expand the types of relationships that can give rise to a claim of sexual harassment. Specifically, the new law now applies where one party holds him/herself out to another as being in a position of being able to help the person establish a business, service, or other professional relationship. As such, individuals such as doctors, therapists, attorneys, real estate agents, landlords, teachers, elected officials, lobbyists, directors, and producers (amongst others) may now be found liable for sexual harassment.

Settlement of Sexual Harassment ClaimsSB 820 prohibits a settlement agreement entered into on or after 1/1/19 from containing language that would prevent the disclosure of factual information related to sexual harassment, sexual assault, or sex discrimination. It still allows for a provision that precludes disclosure of the amount of the settlement paid. It also allows for a provision, at the claimant’s request, that limits the disclosure of the person’s identity or other facts that could lead to the discovery of the person’s identity.

Fair Employment and Housing Act (FEHA) AmendmentsSB 1300 amends the CA FEHA in a number of ways that will have a significant impact on how sexual harassment claims are litigated. 1. Employers are prohibited from requiring employees to sign a release of claim or any right under FEHA in exchange for a raise, a bonus, or continuing employment. Similarly, an employer cannot require employees to sign a non-disparagement agreement or non-disclosure agreement under the same conditions. However, bona fide settlement agreements appear to be excluded from these prohibitions. 2. Additional restrictions will now be placed upon employers’ rights to attorneys’ fees and costs even when they prevail in a FEHA action. 3. Employers may now be found liable for any kind of unlawful harassment by non-employees (not just for sexual harassment per existing law) when the employer either knew or should have known of the conduct and failed to take action. 4. Employers will now have a harder time prevailing in court on harassment claims due to “statements of legislative intent” in this bill such as saying that harassment cases are rarely appropriate for summary judgement and that single incidents of harassing conduct may be sufficient to give rise to a hostile work environment.

Sexual Harassment Prevention TrainingSB 1343 expands the requirements for mandated sexual harassment training for California employers. Existing law requires employers with 50 or more employees (total headcount includes temporary and seasonal staff and all employees anywhere in the U.S.) to provide 2 hours of specified curriculum to their California supervisors and managers every 2 years. Employers with 5 or more employees will now be required to train all California employees at least bi-annually. Prior to 1/1/20, supervisors and managers will still be required to attend 2 hours of training and non-supervisory staff 1 hour. Seasonal, temporary, or any other worker hired to work for less than 6 months must be trained within 30 calendar days of beginning work or within 100 hours worked, whichever occurs first. While the required curriculum has not changed, SB 1300 introduces the concept of “bystander intervention training” and encourages employers to address the tendency for people to remain silent and refrain from providing assistance or coming forward when they witness harassment of others.

Salary History Information – On 1/1/18, California legislation (AB 168) made it illegal for an employer to rely on an applicant’s salary history when determining whether or not to offer employment and in determining the salary to be offered. Additionally, employers were prohibited from seeking salary history either orally or in writing from an applicant. The law left a number of unanswered questions. This year, AB 2282 specified that asking for salary expectations is not a violation of current law. It further clarified that an employer is authorized to make compensation decisions based on an employee’s current salary, should the employee reveal that information voluntarily, so long as any resulting wage differential is justified by factors such an existing seniority or merit system.

Criminal Background Information – On 1/1/18, California legislation (AB 1008) made 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. An exception was made for employers who are required by federal or state law to perform a criminal background check on applicants. SB 1412 amends existing law in order to tighten this exception to only apply in situations where the employer is not permitted to hire someone with a “particular conviction.” As such, for those employers required to do a pre-employment criminal history check, they may only consider these “particular convictions” when making a hiring decision.

Female Members of Boards of DirectorsSB 826 provides for the mandatory inclusion of women on corporate boards of directors. No later than the end of 2019, publicly held domestic or foreign corporations with principal corporate offices in California, must have a minimum of 1 female on its board of directors. By the end of 2021, the number of required females will increase to 2 if the corporation has a total of 5 directors, and 3 if the corporation has 6 or more directors.

Lactation AccommodationAB 1976 makes changes to existing law which requires employers to provide a location other than a toilet stall to employees who need to express breastmilk during the workday. The new law now requires that the location be something other than a bathroom, should be close to the employee’s work area, and should generally be a permanent location only used for such purposes. The use of a temporary location will only be allowed if the employer: 1. is unable to provide a permanent location due to operational, financial, or space limitations; 2. the temporary location is private and free from intrusion while the employee is using it; and 3. the temporary location is only used for lactation purposes while the employee is expressing milk. Agricultural employers will be permitted to use a private, enclosed, shaded space such as an air- conditioned cab or a truck or tractor. If an employer can prove that complying with these new requirements represents an undue hardship for their company, the employer may still be able to provide a location that is something other than a toilet stall (such as a bathroom).

Paid Family LeaveSB 1123 expands the scope of the current California family disability insurance program which provides wage replacement benefits to employees who need to take time off from work to care for family members. Effective 1/1/21, employees who take time off as a result of a qualifying exigency related to the covered active duty in the U.S. armed forces of a spouse, domestic partner, child, or parent will become eligible for paid family leave benefits.

Copy of Payroll Records – Existing law allows current and former employees the right to inspect and copy information in their personnel files within 21 days of a request. SB 1252 clarifies that if requested, the employer must provide copies of the documents to the employee (as opposed to requiring the employee to make the copies him/herself) but may charge the employee for the cost of doing so.

Human TraffickingSB 2034 requires businesses that operate intercity rail, light rail, or bus stations to provide 20 minutes of training by 1/1/21 to new and existing employees who may come into contact with victims of human trafficking. SB 970 amends the California Fair Employment and Housing Act (FEHA) to require hotels and motels (not bed and breakfasts) effective 1/1/20 to provide 20 minutes of training to employees who may come into contact with victims of human trafficking including receptionists, housekeepers, bell desk staff, drivers, and others who interface with customers. The training must be completed within 6 months of hire and every 2 years thereafter.

Contractor Liability – Last year, AB 1701 made certain general contractors liable for unpaid wages and fringe benefits by subcontractors. AB 1565 amended existing law and for contracts entered into after 1/1/19, a direct contractor would be required to include a specific provision in their contracts that lists the documents that the subcontractor would have to produce before disputed payments could be withheld such as payroll and timekeeping records.

Other California Developments:

Independent Contractors – In 2018, the California Supreme Court, in its ruling in the Dynamex case, created a new test by which the California Labor Commissioner will determine if a worker is an employee or an independent contractor. The new ABC test makes it even harder than it was before to treat people as independent contractors. For more information, please see Vantaggio’s article How California’s New ABC Test Impact Employers.

De Minimum Timekeeping – In another significant ruling last year, the California Supreme Court, in Troester v. Starbucks, rejected the long-standing “de minimus” timekeeping rule. Historically, federal courts have found it appropriate for employers to not pay wages for small amounts of time that are difficult to record – up to a total of 15 minutes per day. In this case, the court found the employer liable for paying an employee who worked “off the clock” for several (4 to 10) minutes per shift, commenting that the current use of timekeeping technologies puts California employers in a position to better track regular recurring small amounts of time. The court did note that in cases where the time is “minute” or “irregular,” the time may still be unpaid such as an employee reviewing paperwork that takes a minute or less or reading an email about a shift change during non-work hours. This is a significant change in California wage and hour law that will have significant implications for employers’ payroll practices.

Non-Solicitation and Trade Secret Agreements – A California Court of Appeal, in AMN Healthcare v. Aya Healthcare Services, ruled that a somewhat standard non-solicitation agreement was unenforceable. The employees in this case were recruiters who recruited travelling nurses to work for their employer who provides temporary healthcare professionals to their clients. Four of these recruiters left the company and went to work for a competitor firm where they then began recruiting some of the same travelling nurses. Given that the effected employees’ profession was being recruiters, the court found the non-solicitation agreement that they had previously signed to be a violation of section 16600 of the California Business and Professions code, as it prevented them from carrying out their chosen profession. The court also ruled that given the specifics of this case, the original employer’s list of the prospective travelling nurses was not a bona-fide trade secret. While this case certainly does not prohibit the use of all employee non-solicitation agreements or clauses, employers are cautioned to have these types of agreements as well as trade secret protection agreements drafted carefully by professionals with experience in this evolving and increasingly restrictive area of the law.

Posters – If you need to order new 2019 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 2019 for use of an employee’s automobile – it’s now 58.00 cents per mile (up from 54.5 cents).

What should employers do?

  • Schedule all of your employees to attend Sexual Harassment Prevention Training prior to the end of the year deadline.
  • Ensure that your written Job Applications no longer ask for salary history.
  • Obtain and post your new Employment Posters.
  • Update Employee Handbooks.
  • Ensure that you have a location to provide the appropriate lactation accommodation now required by law.
  • Review your hiring and background check processes for compliance. Ensuring all hiring managers are trained on the legality of their questions.
  • Audit all Independent Contractors to ensure they meet the new, stringent ABC rule.
  • Review your timekeeping and pay practices to ensure that de minimus time is being recorded and paid.
  • Consult with experienced counsel regarding any settlement agreements containing language about sexual or other forms of harassment.
  • Have your existing Non-Solicitation and Trade Secret Agreements reviewed by experienced counsel.
  • 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.

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)

Book your All Employee Sexual Harassment Prevention Training before 2/28/19, and save 10% off!

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

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Special Exemptions Classification Rules – California https://vantaggiohr.com/vhr-insights/special-exemptions-classification-rules-california/ https://vantaggiohr.com/vhr-insights/special-exemptions-classification-rules-california/#respond Tue, 01 Jan 2019 19:44:45 +0000 https://vantaggiohr.com/?p=1428 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 […]

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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 ($45.41 per hour for 2019) OR on a minimum salaried basis ($7,883.62 per month or $94,603.25 per year for 2019) 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!

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How California’s New ABC Test Impacts Employers https://vantaggiohr.com/vhr-insights/california-abc-test-independent-contractors/ https://vantaggiohr.com/vhr-insights/california-abc-test-independent-contractors/#respond Fri, 12 Oct 2018 21:12:19 +0000 https://vantaggiohr.com/?p=1651 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 […]

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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!

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How to Grow A Quality Workforce with Vantaggio HR https://vantaggiohr.com/industry-news/how-to-grow-quality-workforce/ https://vantaggiohr.com/industry-news/how-to-grow-quality-workforce/#respond Wed, 01 Aug 2018 19:24:52 +0000 https://vantaggiohr.com/?p=1622 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 […]

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Staff Meeting

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.

Importance of HR

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.

Vantaggio HR Benefits

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.

HR Solutions

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.

HR Services

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!

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