2016 Employment Law Updates for California

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other California Developments:

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

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

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

And on the Federal Level:

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

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

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

What should employers do?

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

 


 

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

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

 

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

Copyright © Vantaggio HR, ltd., 2016

_____________________________________________________________

 

Lauraine Bifulco is President and Principal Consultant of Vantaggio HR, a human resource outsourcing and consulting firm that works with companies of all sizes across all industries, offering services on a fully outsourced or project basis:

 

On-Site HR * Payroll Admin * Workplace Complaints & Terminations * Multi-State Audits & Handbooks

 

1-877-VHR-relx (1-877-847-7359)   

info@VantaggioHR.com    

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EEO-1 Reporting Deadline September 30

Private employers with 100 or more employees are generally required to file an Employer Information Report or EEO-1 Report by September 30 of each year. Additionally, federal contractors with 50 or more employees are also generally required to file an EEO-1 Report by September 30.

The Standard Form 100 (EEO-1) must be filed by all private employers which are subject to Title VII of the Civil Rights Act of 1964 (as amended by the Equal Employment Opportunity Act of 1972) with 100 or more employees (excluding state and local governments, primary and secondary school systems, institutions of higher education, Indian tribes, and tax-exempt private membership clubs other than labor organizations) or subject to Title VII who have fewer than 100 employees if the company is owned or affiliated with another company, or there is centralized ownership, control, or management (such as central control of personnel policies and labor relations) so that the group legally constitutes a single enterprise, and the entire enterprise employs a total of 100 or more employees.

Additionally, the Standard Form 100 must be filed by all federal contractors (private employers) who are not exempt as provided for by 41 CFR 60-1.5, have 50 or more employees, and are prime contractors or first-tier subcontractors and have a contract, subcontract, or purchase order amounting to $50,000 or more, or serve as a depository of Government funds in any amount, or are financial institutions which are issuing and paying agents for U.S. Savings Bonds and Notes. Only those establishments located in the District of Columbia and the 50 states are required to submit the Standard Form 100. No reports should be filed for establishments in Puerto Rico, the Virgin Islands or other American Protectorates.

All employers which conduct business at only one establishment in one location (single-establishment employers) must complete a single form or use one of the alternate filing methods. All employers which conduct business at more than one establishment (multi-establishment employers) must file a report covering the principal or headquarters office; a separate report for each establishment employing 50 or more persons; a consolidated report that must include all employees by race, sex, and job category in establishments with 50 or more employees, as well as establishments with fewer than 50 employees; and a list with the name, address, total employment, and major activity for each establishment employing fewer than 50 persons. The total number of employees indicated on the headquarters report, plus the establishment reports, plus the list of establishments with fewer than 50 employees, must equal the total number of employees shown on the consolidated report.

All forms for a multi-establishment company must be collected by the headquarters office for its establishments or by the parent corporation for its subsidiary holdings and submitted in one package. For the purposes of this report, the term Parent Corporation refers to any corporation which owns all or the majority stock of another corporation which is considered a subsidiary.

Employers may acquire the necessary race/ethnicity information either by forms completed by employees who self identify or by visual observation for employees who refuse to self identify. Records should be maintained in separate, confidential files for at least one year after this report is made.

The preferred method for completing the EEO-1 is the web-based filing system. The reporting options and other information may be found at the below website.

What employers need to do:

  • Conduct a headcount and determine if you are required to file
  • If required, submit your EEO-1 Report no later than September 30
  • If you have missed the deadline to file,we recommend getting professional advice on your particular situation
  • Call Vantaggio HR if you need assistance with conducting a head count or filing the report

For additional information, please review the EEOC’s website at http://www.eeoc.gov/eeo1survey/.

California’s Paid Sick Days Law Effective 7/1/15 Amended on 7/13/15!

On July 1, 2015, California employers of all sizes where required to begin providing employees with at least 24 hours or 3 days of paid sick time off per year. While its aim was fairly simple and straightforward, AB 1522, the “Healthy Workplaces, Healthy Families Act of 2014” left most employers, HR professionals, and even labor law attorneys with many unanswered questions and struggling with how to comply with this complicated and confusing piece of legislation. Less than two weeks later, on July 13, 2015 Governor Brown signed AB 304 into law. Effective immediately, AB 304 was an urgency piece of legislation drafted to clear up confusion about AB 1522. While it did make certain clarifications, it certainly did not address some of the ambiguities in the first law, and in fact has left us with still more unanswered questions.

For details about the original legislation, please see previous Vantaggio’s article, “Healthy Workplaces, Healthy Families Act of 2014 – Paid Sick Days now Mandated in CA.” The following will summarize the major amendments that AB 304 has made to AB 1522.

Who is an Eligible Employee?
AB 1522 mandated that any employee who works in California for 30 or more days within a year is entitled to paid sick days. AB 304 clarified that those 30 days must be worked for the same employer in order for the employee to qualify for paid sick days. Of note, employers are still left with the dilemma that if they hire an on-call, temporary, or seasonal employee, the employer may not be clear if the employee will end up working for them for 30 days in the coming year. Given that paid sick days must begin accruing upon hire, this presents a unique challenge in some employment relationships.

AB 1522 also provided that certain employees are exempt from the entitlement to paid sick days. Those exclusions include providers of certain in-home services, employees of an air carrier flight deck or cabin crew members who receive paid time off equal to the requirements of the new law, union-represented employees covered by a collective bargaining agreement that provides for paid sick time and meets other requirements, and employees in the construction industry covered by a collective bargaining unit that satisfies specific criteria. AB 304 has added to this list of excluded employees, retired annuitants of a public entity.

How do Paid Sick Days Accrue?
One of the most confusing parts of AB 1522 was the methodology that imposed how paid sick days were to be accrued. Upon hire, all eligible employees had to begin accruing paid sick days at the rate of 1 hour for every 30 hours worked. While accruals had to commence upon hire, an employer could make an employee wait until 90 days of employment before being able to use paid sick days. A the rate of 1 hour per 30 hours worked, a full time employee would accrue almost 9 days (69.33 hours) of paid time off in a year. And while unused sick days needed to be allowed to carry over from one year to the next, employers were allowed to cap the employee’s accrual at 48 hours or 6 days and could further limit the employee’s use to 24 hours or 3 days each year. If an employer wanted to avoid having to track the accruals and carryovers described above, the full 24 hours or 3 days of paid sick days could be provided to the employee in a lump sum at the beginning of each year.

AB 304 has given employers the flexibility to use a different method of accrual other than 1 hour per 30 hours worked – as long as the accrual takes place on a regular basis and the employee is able to accrue at least 24 hours of time off by the 120th calendar day of employment. For employers who have plans that allow for accrual based on a specific number of hours per pay period, this is a welcome flexibility. However employers should note that to reach 24 hours by the 120th day of employment, the accrual would actually result in approximately 72 hours of paid time off in a year – slightly more than the 1 in 30 method. As such, employers who amended an existing plan that used a per pay period accrual in order to meet the 1 in 30 requirement may actually need to revise their plan again to get to the new higher accrual requirement.

Further, AB 304 clarified that an employer’s ability to limit and employee’s use of paid sick days to 24 hours per year can be calculated based on an anniversary year, a calendar year, or any other 12-month period.

What if the Company already offers Paid Sick, Vacation, or PTO?
AB 1522 clearly stated that if an employer who already has a paid leave or paid time off policy that met the minimum requirements of the new law, the employer would not be required to offer additional paid sick days. Of note, the employer’s existing plan had to satisfy the accrual, carry over, and use requirements of the new law and provide no less than 24 hours or 3 days of paid sick time off or equivalent paid time off. Again, while seemingly straightforward, this requirement was very challenging for employers who found that almost all existing plans needed some level of amendment in order to comply. The accelerated rate of accrual required by the one hour for 30 hours worked proved to be the most difficult threshold to meet unless the employer already had a very rich vacation or PTO plan in place.

AB 304 created an opportunity for an employer to “grandfather” an existing plan. If the employer had a paid time off plan in place before January 1, 2015 and that plan was not amended as of July 13, 2015, the employer would not need to provide additional paid sick days as long as the existing plan provided that employees accrue no less than 8 hours or 1 day of paid time off within 3 months of employment of each calendar year and no less than 24 hours or 3 days of paid time off within 9 months of employment. Surprisingly, a plan that meets this new requirement could allow for employees to accrue as little as 4 days of time off in a year at a rate that is far less than the 1 hour for 30 hours worked in AB 1522. However, for all employers who in good faith changed their plans to get into compliance by July 1, 2015, this option is not available.

What Happens if the Company Provides Unlimited Paid Time Off?
In recent years, many firms (particularly law firms and medical practices) have implemented unlimited paid time off policies. As long as the employees meet their performance goals, their time off is not tracked and they continue to receive their full salary. After the passage of AB 1522, the California Department of Labor Standards Enforcement (DLSE) took the position that such plans would violate the law due to the fact that employees would not see their available, accrued sick days balance on their paystubs as required by the new law. AB 304 addressed this issue directly and stated that such plans would be found compliant so long as the word “unlimited” appears as their sick days accrual balance on each pay stub.

How are Employees Paid for Paid Sick Days?
Under AB 1522 an employee was required to be paid for paid sick days at the employee’s regular hourly wage. If the employee had different hourly rates of pay, earned commission, was paid via piece rate, or was a salaried, non-exempt employee, the employer had to take the total amount paid to the employee (not including overtime premium pay) in the full pay periods from the prior 90 days and divide by the total hours worked, to determine the hourly rate of pay to be used for paid sick days.

AB 304 allows employers to pay sick time for non-exempt employees either (1) based on the regular rate of pay for the workweek in which the employee uses paid sick days or (2) by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. What this means is that an employee who is paid a straight hourly rate of pay, without commissions, bonuses, or other incentives, can be paid for sick days at that regular hourly rate. AB 304 also clarified that salaried, exempt employees could be paid for paid sick days in the same manner that that employer pays for other forms of paid time off.

What Happens to Paid Sick Days upon Termination of Employment?
AB 1522 established that employees do not have to be paid for unused sick days at the time of termination. However, if the employee returns to the same employer within one year, the previously unused sick time has to be reinstated. A 304 clarifies that if the employee was paid out for the unused sick time at the time of termination, no reinstatement is required.

What are the Paperwork and Recordkeeping Requirements?
Amongst other recordkeeping requirements, AB 1522 requires employers to display the amount of available paid sick time on an employee’s itemized wage statement or in an equivalent document provided to employees on each pay date. AB 304 has delayed this requirement for employers covered by Wage Orders 11 and 12 (broadcasting and motion picture industries) until January 21, 2016.

Additionally, AB 304 clarified that an employer does not need to ask for or record the reason for which an employee uses paid sick days or other paid time off. Of note is that the DLSE provided guidance recently on their interpretation of AB 1522 and claimed that if an employer wanted to use a PTO plan to meet the requirements of the new paid sick days law, the employer would be required to track how much PTO time an employee used for vacation vs. sick time. That guidance pushed many employers away from using a PTO plan to meet the paid sick days mandate as such recordkeeping would be onerous, impractical, and totally inconsistent with how a PTO plan is intended to work. AB 304 is good news for employers on this topic.

What Questions Remain Unanswered?
Many areas of uncertainty raised by AB1522 were not addressed by AB 304. Additionally, over the past several months, the DLSE has published and updated several times FAQs on their website that answered a myriad of questions on AB 1522. They have also been fairly responsive in answering employer’s questions via phone and email. As of the passage of AB 304, the DLSE has placed a warning message on the FAQ page indicating that they are currently working on an update. Employers should be cautious about relying on interpretations provided by the DLSE that predate AB 304.

What should Employers Do?
First of all, if you haven’t done so already, employers need to get into compliance with both new sick leave laws. Of note:

  • If you have not changed your existing policy, determine if it is eligible for grandfathering under AB 304.
  • Analyze your current vacation and PTO plans to determine if you need to amend them to comply with the new paid sick days requirements.
  • Study AB 304 carefully to determine if you can take advantage of some of the increased flexibility it provides for employers.
  • If needed, add a new paid sick days policy to your employee handbook. If you don’t have a handbook, you should still create a written policy for distribution to current employees and new hires.
  • Talk with your accounting department and payroll provider to ensure that your systems can provide the necessary wage calculations, accruals, and recordkeeping.
  • Determine if you are in a city that already has paid sick days requirements and analyze which statute is more favorable to your employees. Failure to apply the more generous benefits will subject you to liability potentially under both the state and the city statutes.
  • Update your employee handbooks, remembering that this new, amended Paid Sick Days law does not effect other benefits such as California Family Rights Act (CFRA), Pregnancy Disability Leave (PDL), Paid Family Leave, Crime Victims Leave, etc. While those other rights and benefits remain unchanged, the policies in your handbook may need revision due to a certain amount of paid time off now being available. The synthesis of these various rights and benefits is not always straightforward.
  • Unionized employers should review their collective bargaining agreements to see if they meet the provisions for covered employees to be excluded from Paid Sick Day benefits.
  • Update new hire documentation to provide the required information about Paid Sick Days.
  • Obtain the revised version of the DLSE’s Notice to Employees, complete one for each current non-exempt employee, and if you have not already done so, distribute immediately.
  • Obtain the new required poster and display it within your work locations immediately.
  • Stay tuned for more information as we hope additional guidance will be forthcoming from the DLSE.

To review the full text of the law, click here: AB 304 – Amended Paid Sick Days Law

To access the DLSE’s website for more information click here: DLSE’s FAQs on Paid Sick Days


 

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

If Vantaggio has drafted your handbook for you in the past, please contact us asap about the much needed 2015 updates. And as always, please call us with any questions.

California’s Family Rights Act Amended on July 1, 2015

Read the PDF version here

On July 1, 2015, the California’s Fair Employment and Housing Council’s updates to the California Family Rights Act (CFRA) went into effect. The intent was to clarify the existing regulations and bring them more in line with the federal Family Medical Leave Act (FMLA). While both sets of laws generally provide up to 12 weeks of unpaid leave to eligible employees and have many similar provisions, historically, the two laws also have had significant divergences. The new CFRA regulations incorporated many elements of the 2013 FMLA regulations, but intentionally elected to retain important differences and even created new ones. California employers with 50 or more employees must comply with both sets of rules. As an added complication, in some places these new regulations caused some provisions of CFRA to be more out of sync with existing California Pregnancy Disability Leave (PDL) regulations, which themselves were just updated in 2013. Unlike CFRA, PDL law applies to employers with as few as 5 employees. Faced with the challenge of complying with all these bodies of law, California remains a challenging place to be an employer.

The following describes several of the major provisions where CFRA and FMLA are now aligned:

  • Employers are now allowed to retroactively designate a CFRA leave as long as the designation is provided to the employee with appropriate notice and the retroactive designation causes no harm to the employee.
  • Employers must now respond to requests for CFRA leave in the same 5 business days as required under FMLA. Additionally CFRA has adopted many (but not all) of the same timing and informational requirements for most other employer and employee notices and consequences for employees who fail to respond to the employers request for information.
  • Definitions such as “Covered Employer” and “Joint Employer” mirror the FMLA definitions.
  • CFRA now also uses the uses the “assigned worksite” as the home base for determining if there are 50 employees within a 75-mile radius.
  • The new CFRA regs adopt the same rules as FMLA for determining employee headcount and eligibility, calculating hours of service and the 12-month period, maintaining and paying for benefits during leave, an employer’s ability to recover health insurance premiums, managing intermittent and reduced work schedules, handling overtime, treating holidays that fall during leave, and terms and conditions of job reinstatement.
  • CFRA has adopted FMLA’s definition of, and notice requirements to, a “Key Employee” who is a salaried, leave-eligible employee among the highest paid 10 percent of all the employees employed by the employer within 75 miles of the employee’s worksite. Such key employees can be denied reinstatement after leave if doing so would cause “substantial and grievous economic injury” to the employer’s operations.
  • Under the new CFRA regulations, employees who fraudulently obtain CFRA leave are not entitled to job protection or health insurance benefits. However, the employer has the burden to prove that the leave was fraudulently obtained under California law, and it is still unclear what would constitute proof.
  • Both sets of regulations now definitively call out that employees may be entitled to additional leave as a “reasonable accommodation” if the reason for the leave qualifies as a disability under both the federal Americans with Disabilities Act (ADA) and/or the California Fair Employment and Housing Act (FEHA). The employer is required to engage in the interactive process with the employee at the end of the protected leave if it appears that the employee has a disability that may warrant more time off.

Below is a summary of some of the major differences that remain between CFRA and FMLA regulations:

Medical Certifications

FMLA allows the employer in certain circumstances to ask for a new medical certification every 6 months, such as when a condition’s duration is “lifetime” or “unknown.” Under the new CFRA regs, an employer remains unable to ask an employee for a new medical certification before the original or current one expires. It is important to note that while the federal Department of Labor’s (DOL) medical certification forms explicitly ask for symptoms and a diagnosis from the healthcare provider, requesting this information is a violation of California law. As such California employers are advised to not use the federal Medical Certification form.

Leave Letters/Forms

The federal DOL makes available model notices which an employer may use for FMLA related leaves. While California employers are not prohibited from using these forms, they would need to modify the DOL notices in order to be compliant with CFRA regulations. Most importantly, CFRA requires employers to provide employees on CFRA leave with information regarding the maintenance of health insurance benefits for a maximum period that exceeds the limits described on the FMLA notices; the total time available for pregnancy disability combined with baby bonding leave is different under CFRA and FMLA, and the definition of several terms including “serious health condition” and “inpatient care” are different under CFRA and FMLA.

Health Benefits

In California, employers must maintain health insurance benefits for up to four months of Pregnancy Disability Leave (PDL) plus 12 additional weeks for baby-bonding CFRA leave. FMLA only requires the employer to maintain these benefits for 12 weeks, regardless of the reason for the leave.

Second Medical Opinions

Under FMLA an employer only needs a “reason” to doubt the validity of the first medical opinion and may request a second medical opinion for the employee’s or family member’s serious health condition. To obtain a second opinion, the new CFRA regulations require the employer to have a “good faith, objective reason” to doubt the validity of the employee’s first medical opinion and are only allowed for the employee’s own serious health condition. Unfortunately, the new CFRA regs did not provide any guidance about what would constitute a good faith, objective reason.

Contacting the Healthcare Provider

While FMLA allows certain employees of the employer to contact the employee’s healthcare provider to authenticate or clarify a medical certification provided by the employee, CFRA prohibits an employer from contacting the employee’s healthcare provider for any reason other than to authenticate the documentation provided.

Use of Paid Leave

FMLA allows the employer to require the use of any paid time off as long as it is done consistently with the employer’s regular, established policies. Under CFRA, employees may elect, or the employer may require, the use of vacation or PTO; however, the employer may only require the use of paid sick time if the leave is for the employee’s own serious health condition. It is important to note the potential conflict with both California’s “kin care” and new paid sick leave laws which allow employers to charge an employee’s paid sick time bank when the leave is to care for a family member.

While the FMLA regulations and the old CFRA regulations both spelled out that an employer can only require an employee to use paid time off during periods of unpaid leave, some confusion existed as to what type and how much wage replacement an employee would need to be receiving to turn that portion of leave into paid leave. Clearly, an employee receiving disability or workers’ compensation wage replacement benefits precluded an employer from mandating the use of paid time off. The new CFRA regulations take that position one step further by stating that an employee receiving “any form of disability benefits” including Paid Family Leave (which is a benefit unrelated to the employee’s disability) is on a paid leave.

Inpatient Care

When determining an employee’s eligibility for FMLA leave, an overnight stay in the hospital is one way to establish that the employee has a qualifying “serious health condition.” The new CFRA regulations only require the “expectation” that the employee will have an “overnight stay” in a hospital, hospice, or residential facility to be considered inpatient care. This means that an employee could visit the ER with the expectation that he/she will be admitted to the hospital, but if instead is sent home, The ER visit would constitute inpatient care under CFRA.

Continuing Care

It is important to note that new CFRA regulations did not adopt the 2013 FMLA updates regarding the definition of “continuing treatment” or the clarifications about full calendar days, in-person treatment, 1st visit with 7 days, 2nd visit within 30 days, or chronic conditions treatment twice a year. As such, it remains significantly easier to be deemed to have a serious health condition under CFRA as opposed to FMLA. This is yet another reason for California employers to avoid using the DOL model notices and medical certification forms.

Fitness for Duty Certifications

Under FMLA, the employer is able to request a Fitness for Duty Certification prior to the employee returning to work in which the healthcare provider states that the employee is able to resume the performance of all essential functions of the job. The employer is able to make this request provided that the employee is notified at the time he/she receives the required Rights and Responsibilities Notice, the company has a uniform policy of requiring a Fitness for Duty Certification for all similarly situated employees, and a job description that lists all the essential functions of the job was provided to the employee along with the Rights and Responsibilities notice. The new CFRA regulations, clearly state that an employer is only allowed to request a Fitness for Duty Certification from the employee after the employee has already returned to work and only if there is a business necessity for such a request. Otherwise, employers may only request a simple statement from the healthcare provided that the employee is released to return to work. .

Required Posters

The new CFRA regs include language that must be provided to employees regarding CFRA and Pregnancy Disability Leave. The information must be posted, provided to new hires, disseminated periodically to staff, and included in an employer’s next revision of their employee handbook if they have one. At the current time, the wording in the regs is different from the “Notice B” published by the Department of Fair Employment and Housing. The DFHE has posted on their website that they are aware of the discrepancy and will be working on new separate notices for CFRA and PDL. Until these new notices are available, employers will not be penalized for using either the combined CFRA/PDL language in the new regs or the existing “Notice B.”

To review a redline version of the new CFRA regulations, click here.

To access the DFEH’s website for more information click here: http://www.dfeh.ca.gov


 

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

Vantaggio HR has developed a Leave Administration Kit with easy to follow instructions, customizable letters for all types of leave (including FMLA, CFRA, PDL, Workers Comp and California’s Military Spousal Leave) and ready-to-use leave request and Medical Certification forms. All for the attractive price of $295.00.

Call us today to order your 2015 Leave Administration Kit!

Healthy Workplaces, Healthy Families Act of 2014 – Paid Sick Days now Mandated in CA

It now pays to get sick in California! On July 1, 2015, California employers of all sizes will be required to provide their employees with at least 24 hours or 3 days of paid sick time off per year that accrue at the rate of 1 hour per 30 hours worked. California becomes only the second state in the country, after Connecticut, to require employers to provide paid sick days. (What? We are usually the first on this kind of thing!). The new legislation surprisingly does not exempt small employers and requires the paid sick days to be provided to all employees who work at least 30 days in the year. While unused sick days do not need to be paid out upon termination, employers are faced with strict record-keeping, posting, notice, and anti-discrimination and retaliation provisions. The “Healthy Workplaces, Health Families Act of 2014” is leaving smaller employers who currently do not offer any paid time off to their employees scratching their heads at the bill’s proclamation that “Providing paid sick days is affordable for employers and good for business.” Those who already provide some form of paid time off such as sick days, vacation, personal time, or PTO are struggling with the complexities and unanswered questions in the new law about whether their current policies will meet the new requirements. This is a complicated and confusing piece of legislation that will require careful analysis.

Who is a Covered Employer?
All private and public employers including the state, political subdivisions, and municipalities are required to comply with the new law. Of note, there is no minimum number of employees. Even employers with 1 or 2 staff members and non-profit organizations will now be required to provide paid sick days.

Who is an Eligible Employee?
Effective 7/1/15, any employee who works 30 or more days within a year is entitled to paid sick days. This will include full-time, part-time, temporary, and even seasonal workers. The only exclusions are providers of certain in-home services, employees of an air carrier flight deck or cabin crew members who receive paid time off equal to the requirements of the new law, union-represented employees covered by a collective bargaining agreement that provides for paid sick time and meets other requirements, and employees in the construction industry covered by a collective bargaining unit that satisfies specific criteria.

How do Paid Sick Days Accrue?
Upon hire, all eligible employees must begin accruing paid time off at the rate of 1 hour for every 30 hours worked. For purposes of calculating the accrual, exempt, salaried employees are considered to work 40 hours per week, unless their normal workweek is less than 40 hours. Employees are entitled to use accrued paid sick days beginning on their 90th day of employment. Accrued paid sick days must be allowed to carry over to the following year of employment; however, an employer may limit the employee’s use of paid sick days to 24 hours or 3 days each year. Under no circumstances must an employer allow the total accrual of paid sick days to exceed 48 hours or 6 days. If an employer wants to avoid having to track the accruals and carryovers described above, the full 24 hours or 3 days of paid sick days must be provided to the employee in a lump sum at the beginning of each year. For existing employees, this will be on 7/1/15. For new hires after that, it will be on the anniversary of hire.

While that might sound straight forward at an initial read, we find that the law fails to answer some basic questions:

  • If the employer sets up an accrual at 1 hour per 30 hours worked, a full-time employee would accrue 69 hours in a full year. The accrual can be capped at 48 hours, and usage can be limited to 24 hours. How am we going to explain this to our employees and get our payroll system to track this?
  • How do you handle a temporary employee that is hired with uncertainty about whether or not he/she will work 30 days in the year?
  • Do employees who live outside of California but travel to California and work here for more than 30 days in a year need to be allowed to accrue paid sick days?
  • Do the 90 days of employment need to be continuous before the employee can begin using paid sick days?
  • Does the 1 hour of paid sick time that accrues for every 30 hours of time worked include overtime hours?
  • The law refers frequently to “24 hours or 3 days.” Does that mean that we can calculate part-time employees’ maximum paid sick time based on the number of hours in their typical work day?

How can Employees Use Paid Sick Days?
Employees must be allowed to use paid sick days for the diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee’s family member, or if a victim of domestic violence, sexual assault, or stalking. For purposes of this law, family member is defined as a child, parent, step-parent, spouse, registered domestic partner, grandparent, grandchild, or sibling. Note that the list is more expansive than for other California benefits such as leave under California Family Rights Act (CFRA) and Paid Family Leave (PFL) benefits – another source of potential confusion for employers and employees. Employees must be allowed to request the use of paid sick days either verbally or in writing with reasonable advanced notice when the need for time off is foreseeable. When the need for time off is unforeseeable, the employee only needs to provide notice as soon as practicable. The employer may set a reasonable minimum increment for use of paid sick time but it cannot exceed 2 hours. Employees may not be required to find a replacement worker to cover the days he/she will be using paid sick days.

Again, we are left with unanswered questions:

  • How are employers supposed to reconcile the new paid sick days requirements with the existing kin care law? We now clearly have to provide at least 24 hours or 3 days of paid sick time – all of which is allowed to be used for a family member. As kin care only requires that employees be allowed to use ½ of their total annual accrual to care for family members, what happens if an employer provides more than 24 hours of paid time off? How much of that additional time would be allowed to be used to care for family members?
  • How can an employer obtain proof that paid sick days were used for a proper reason? The law states explicitly that it does not affect any other laws guaranteeing the privacy of health information and that all information obtained as part of providing paid sick days shall be treated as confidential and not disclosed to any per except the affected employee. This certainly raises questions about asking an employee to provide a note from a medical provider and sharing that information with a supervisor.

How are Employees Paid for Paid Sick Days?
Employers must pay employees at “the same wage as the employee normally earns” no later than the payday for the next regular payroll after sick time is taken. If an employee has different hourly rates of pay, earns commission, is paid via piece rate, or is a salaried, non-exempt employee, the employer must take the total amount paid to the employee (not including overtime premium pay) in the full pay periods from the prior 90 days and divide by the total hours worked, to determine the hourly rate of pay to be used for paid sick days. While terminating employees do not have to be paid out for unused, accrued sick days, if rehired within one year, the hours must be reinstated.

  • Are our payroll companies going to be able to come up with these types of calculations for us?
  • Do rehired employees need to wait 90 days after rehire before being able to use reinstated paid sick days?

What if the Company already offers Paid Vacation or PTO?
The legislation clearly states that if an employer who already has a paid leave or paid time off policy that meets the minimum requirements of the new law, the employer will not be required to offer additional paid sick days. Of note, the employer’s current plan must satisfy the accrual, carry over, and use requirements of the new law and provide no less than 24 hours or 3 days of paid sick time off or equivalent paid time off.

Some of the challenges would be:

  • As California law requires vacation and PTO to accrue with each pay period, an employer would not be able to use the lump sum methodology allowed for paid sick days. As such, employers would have to examine how much time off their employees currently accrue to see if the current accrual meets the minimum requirements under the new law of 1 hour per 30 hours worked. Employers with current plans where employees accrue a certain number of hours per pay period regardless of hours worked, will potentially have to amend their plans, particularly to address part-time employees.
  • California employers are not permitted to have decelerating vacation and PTO accruals. To meet the new paid sick days requirements, an employee must accrue paid time off at no less than 1 hour per 30 hours worked. This means that a full-time employee, for example, would accrue 2.67 hours of paid time in an 80 hour bi-weekly payroll resulting in a total of 69.33 hours at the end of the year. If an employer did not want to provide this much paid time off, they would not be allowed to decrease the rate of accrual during the course of the year.
  • Continuing with the example above, as vacation and PTO policies must under California law allow for carryover of unused time and cannot cap the balance at less than 1.5 to 2 times the total annual accrual, the minimum accrual to meet the new requirements would result in an accrual cap of at least 104 hours (69.33 x 1.5). Again, this may well cause employers to have to significantly enrich an existing policy in order to meet the new requirements.

What are the Paperwork Requirements?
Effective 1/1/15, employers will be required to provide information about the company’s paid sick days policy to new employees at the time of hire either on the Notice to Employee which has just been updated by the DLSE. For current employees, a revise Notice to Employee may be used or the employer can communicate the required information in a separate written document within 7 days of the change in benefits. As exempt employees do not receive a Notice to Employee, our recommendation would be to prepare a written policy document to be given to all employees. Effective 1/1/15, there is also a new poster describing paid sick days that must be posted. Copies of the new Notice to Employee and the poster are available here http://www.dir.ca.gov/dlse/Publications/LC_2810.5_Notice_(Revised-11_2014).pdf.

In addition to these initial notices and the poster, employers must also provide information about the amount of paid sick days (or other paid time off) available on the employee’s paystubs or in a separate document provided with each paycheck. Records of hours worked, paid sick days accrued, and paid sick days used must be maintained for 3 years. If an employer fails to maintain the proper records, the employee will be entitled to the maximum number of hours accruable unless the employer can show “clear and convincing” evidence otherwise.

Discrimination and Retaliation?
Employers are prohibited from denying an employee the right to use accrued sick days. They further cannot discharge, threaten to discharge, demote, suspend, or in any manner discriminate against an employee for using accrued sick days, attempting to use them, filing a complaint alleging a violation, cooperating in an investigation, or opposing any policy or practice prohibited by the new law. There will be a new rebuttable presumption of unlawful retaliation if an employee denies an employee the right to use accrued sick days, discharges, or takes any other adverse action against an employee within 30 days of the employee engaging in any of the described protected actions.

  • Employers will be challenged with administering attendance guidelines and discipline policies in order to avoid claims of retaliation.

What are the Fines and Penalties?
Employers who withhold paid sick days from employees will be subject to a penalty in the amount of the dollar value of the paid sick days withheld multiplied by 3, or $250, whichever amount is greater, not to exceed an aggregate penalty of $4,000. If a violation causes “other harm” to an employee or other person, the administrative penalty will include an additional sum of $50 for each day that the violation occurred. Additionally, if the Labor Commissioner needs to take enforcement action, it can order the violating employer to pay the state a penalty of $50 for each day that the violation occurred. The Labor Commissioner or the Attorney General can also bring a civil action in court against the employer which may include the collection of equitable relief on behalf of the employee including reinstatement, backpay, the payment of unlawfully withheld sick days, reasonable legal fees, and additional penalties. Fortunately, the law provides that no penalties will be assessed due to an isolated and unintentional payroll or notice error that is clerical or inadvertent. However, prior violations and current compliance efforts with regards to written policies, procedures, and practices will be taken into consideration.

What should Employers Do?
First of all, employees need to get prepared now for these new requirements. Waiting until July 2015 could prove costly as the penalties are significant and the notice and posting requirements go into effect on January 1st:

  • Analyze your current vacation and PTO plans to determine if you want to amend them to comply with the new paid sick days requirements.
  • If needed, add a new paid sick days policy to your employee handbook. If you don’t have a handbook, you should still create a written policy for distribution to new hires.
  • Talk with your accounting department and payroll provider to ensure that your systems can provide the necessary wage calculations, accruals, and recordkeeping.
  • Determine if you are in a city that already has paid sick days requirements and analyze which statute is more favorable to your employees. Failure to apply the more generous benefits will subject you to liability potentially under both the state and the city statutes.
  • Update your employee handbooks, remembering that this new Paid Sick Days law does not effect other benefits such as California Family Rights Act (CFRA), Pregnancy Disability Leave (PDL), Paid Family Leave, Crime Victims Leave, etc. While those other rights and benefits remain unchanged, the policies in your handbook may need revision due to a certain amount of paid time off now being available. The synthesis of these various rights and benefits is not always straight forward.
  • Unionized employers should review their collective bargaining agreements to see if they meet the provisions for covered employees to be excluded from Paid Sick Day benefits.
  • Update new hire documentation to provide the required information about Paid Sick Days.
  • Obtain the revised version of the DLSE’s Notice to Employees, complete one for each current employee, and distribute no later than 1/8/15.
  • Obtain the new required poster and display it within your work locations prior to 1/1/15.
  • Stay tuned for more information as we hope additional guidance will be forthcoming from the Labor Commissioner.

To review the full text of the law, click here:
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB1522
To access the DLSE’s FAQs on the subject, click here: http://www.dir.ca.gov/dlse/Paid_Sick_Leave.htm

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

Come attend one of our upcoming, interactive workshops where our consultants will help you review your existing polices, decide what to change and what not to change, and assist you with crafting new compliant polices. Bring your laptop and your current polices, and you’ll leave the workshop with new policies that are ready to be added to your current handbook.

If Vantaggio has drafted your handbook for you in the past, please contact us asap about the much needed 2015 updates. And as always, please call us with any questions.

2015 Employment Law Updates for California

2014 and 2015 are proving to be anything but easy for employers in California who want to keep in compliance. In 2014 we had an increase in Minimum Wage, new guidelines regarding Meal and Rest Periods, Military and Veteran status added to the list of protected categories, the definition of Sexual Harassment expanded, additional protections for Whistleblowers, and changes to several mandated Leaves of Absence. In 2015, by far, the most impactful new legislation requires employers to provide Paid Sick Days to all employees as of July 1, 2015. While there is much talk about the new paid sick days law, employers need to be mindful of quite a few other employment-related bills that go into effect in 2015 – many of which provide clarification to or add on to bills that took effect in 2014. A colleague of mine recently lamented that now California employers almost need to adopt an employment attorney just so they can stay in business! As a more manageable alternative, we’ve prepare the following brief description of a number (but mind you, not all) of new employment laws that have gone into effect for 2014 and 2015:

Paid Sick DaysAB 1522 is by far the most significant change in California employment law in the past several years. While many employers are focusing on the requirement to provide all employees with 3 days of paid sick time off as of July 1, 2015, some of the bill’s requirements went into effective as of January 1, 2015 and include an updated Notice to Employees for all current staff and new hires and a new Paid Sick Days Poster. As this law is anything but straightforward and the penalties for non compliance are significant, employers are encouraged to study its various provisions carefully and sooner rather than later. A particular challenge presents itself for employers who already have some form of vacation, sick, or PTO plan in place who wish to keep their existing policy but modify it to be compliant with the new regulations. For more information, please read our detailed article: Healthy Families, Healthy Workplace Act of 2015, Paid Sick Days now Mandated in California.

Minimum Wage – California’s minimum wage increased to $9.00 on July 1, 2014 and will increase again to $10.00 on January 1, 2016. As a reminder, employers with exempt employees need to verify that they are paid at least twice minimum wage for the equivalent of full time work, or at least $37,440 annually in order to remain exempt from overtime. For details, see AB 10. Damages for employers who fail to pay minimum wage were increased on January 1, 2014 by AB 241 to $100 per employee for each pay period where overtime was not paid properly for an initial offense and $250 for subsequent violations.

Minimum Wage – California’s minimum wage increased to $9.00 on July 1, 2014 and will increase again to $10.00 on January 1, 2016. As a reminder, employers with exempt employees need to verify that they are paid at least twice minimum wage for the equivalent of full time work, or at least $37,440 annually in order to remain exempt from overtime. For details, see AB 10. Damages for employers who fail to pay minimum wage were increased on January 1, 2014 by AB 241 to $100 per employee for each pay period where overtime was not paid properly for an initial offense and $250 for subsequent violations.

Meal and Rest Periods – Cal/OSHA requires employers with outdoor places of work to provide Cool-Down Rest Periods (CDRPs) in the shade of not less than 5 minutes at a time on an as-needed basis for employees to protect from overheating. SB 435 (effective January 1, 2014) clarifies that if an employer fails to provide such CDRPs, employees are entitled to the same 1 hour of pay premium penalty that applies to missed meal and rest breaks. SB 1360 (effective January 1, 2015) clarifies that such CDRPs are to be counted as time worked.

Prevailing Wages – a number of bills were passed that relate to prevailing wages which typically impact employers who provide services or who do construction work on public works projects or for the government. 2014 bills: AB 1336, SB 7, SB 54, SB 377, SB 776. 2015 bills: AB 26, AB 1870, AB 1939, AB 2272, AB 2744, SB 266.

Domestic Work Employees – The Domestic Worker Bill of Rights, AB 241, provides for overtime pay for certain in-home, domestic employees who are also personal attendants. Such employees were previously considered exempt but effective January 1, 2014 are eligible for overtime if they work more than 9 hours in a day or 45 hours in a workweek. Note that effective January 1, 2015, federal law provides for overtime for personal attendants hired by a third party or an agency if they work over 40 hours in a week. Any employer with in-home employees should study the definitions in these new regulations carefully not only because of the exclusions within the law about also due to the possible intersection with federal rules.

Protection for Exercising Rights – Previously, the law only protected employees from being discharged or discriminated against as a result of their exercising their rights under the CA Labor Code. Effective January 1, 2014, AB 263 further protects employees against retaliation and adverse action if they make either a written or verbal complaint about wages due to them. An employer is also prohibited from discharging, discriminating, retaliating, or taking any adverse action against an employee as a result of the employee updating his/her personal information. The law imposed steep $10,000 civil penalties per employee, per violation. In 2015, AB 2751 clarifies that the employee would only be protected when making a “lawful” change to his/her personal information and further clarifies that the $10,000 penalties would be paid directly to the employees.

Immigration Matters – AB 263 (January 1, 2014) makes it an unfair immigration-related practice to threaten to contact immigration authorities if an employee exercises his/her rights under the CA Labor Code. AB 2751(January 1, 2015) expands that protection to include filing, threatening to file, or filing a false report or complaint with any state or federal agency. SB 666 (January 1, 2014) permits the state to suspend or revoke an employer’s business license who reports or threatens to report the immigration status of an employee who has exercised a right related to his/her employment. It also allows for the suspension, disbarment, or discipline of attorneys for similar conduct against witnesses or other parties in a lawsuit, and imposes civil penalties of $10,000 per violation. SB 666 does clarify, however, that employers are not subject to suspension or revocation of their business license for requiring workers to verify their employment eligibility through the I-9 process. SB 524(January 1, 2014) clarifies that a person may be found guilty of  criminal extortion if the person threatens to report the immigration status or suspected immigration status of an employee or his/her relatives and family.

Driver’s Licenses for Undocumented Immigrants – Passed in 2014, AB 60 became effective on January 1, 2015, and provides for the DMV to issue driver’s licenses to an undocumented person who can prove his/her identity and CA residency and who can meet all other licensing requirements. Employers should note that such licenses will bear a notation stating that they are not valid for federal purposes such as verifying employment through the I-9 process. AB 1660 (January 1, 2015) makes it a violation of the CA Fair Employment and Housing Act for an employer to discriminate against an individual because he/she holds an AB 60 driver’s license and requires all driver’s license information obtained by the employer to remain confidential. This law clarifies that completing the I-9 process does not violate CA law, and further prohibits an employer from requiring an employee to provide a driver’s license unless being in possession of a valid driver’s license is required by law or a legally permissible job requirement. For employers and HR practitioners who now feel Between a Driver’s License Rock and an I-9 Hard Place, please attend our upcoming seminar – please contact our office or wait for more details in a future e-publication.

Discrimination and Retaliation – Military and Veteran Status was added to the list of categories protected from employment discrimination under the Fair Employment and Housing Act (FEHA) by AB 556 (January 1, 2014). AB 1443 (January 1, 2015) adds unpaid Interns and Volunteers to the individuals who are protected under the FEHA.AB 1792 (January 1, 2014) prohibits an employer from discrimination and retaliation against employees receiving public assistance in the form of participation in the Medi-Cal program and requires state agencies to prepare lists of the top 500 employers with the most number of employees enrolled in Medi-Cal. These lists become available to the public in January 2016. For purposes of AB 1792, “employer” is defined as an entity with more than 100 employees enrolled in Medi-Cal. The Office of Federal Contract Compliance (OFCCP) released new Regulations on Individuals with Disabilities (IWDs) that became effective on March 24, 2014 which prohibit federal contractors and subcontractors from discrimination against IWDs and require employers to take affirmative action.

Sexual Harassment – AB 292 (January 1, 2014). Amends the definition of harassment to clarify that sexually harassing conduct does not need to be motivated by sexual desire. Effective January 1, 2015, SB 1087 requires farm labor contractors to provide sexual harassment prevention training to supervisory and nonsupervisory employees and further places restrictions on the ability to obtain a license by a farm labor contractor who has committed sexual harassment.

Bullying in the Workplace – AB 2053, effective January 1, 2015, requires employers who must provide mandatory sexual harassment training (i.e. employers with 50 or more employees) to include information in that training that addresses the concept of “abusive conduct” in the workplace. While this law does not make such abusive conduct illegal, it does contain a definition of what constitutes abusive conduct. Many feel that it is simply a matter of time before we see employees being able to bring bullying lawsuits against their employers. There is currently legislation pending in a number of states to make bullying illegal in the workplace.

Time off for Crime Victims –  SB 288 (January 1, 2014) expands the existing Crime Victims Leave by allowing time off from work to appear in a court proceeding in which the victim’s rights are at issue as a result of a number of specific crimes. SB 400 (January 1, 2014) extends rights already available to employees who are victims of domestic violence or sexual assault to staking victims and further makes it illegal to discriminate or retaliate against an employee because of his/her status as a victim. Of note to employers is that this law now imposes areasonable accommodation requirement on employers who will now be obligated to take measures to help ensure these employees’ safety while at work.

Time off for Emergency Duty – Previous law provided that employers with 50 or more employees had to give volunteer firefighters up to 14 days of unpaid time off per year to engage in training. AB 11 (January 1, 2014) expands this right to Reserve Peace Officers and Emergency Rescue Personnel. Effective January 1, 2015, AB 2535adds employees who are members of a Disaster Medical Response Team and clarifies that an employee who is a healthcare provider must notify  the employer at the time he/she is designated as emergency rescue personnel and also at the time of learning that he/she will be deployed.

Paid Family Leave  (PFL) – Often a source of confusion for employees and employers, California’s Paid Family Leave program is a wage replacement benefit funded by mandatory deductions from employees’ paychecks that go into a state-administered fund. It is neither an entitlement for an employee to take a leave of absence or an obligation for an employer to grant leave. Effective July 1, 2014, SB 770 expands the PFL program to allow for benefits when an employee takes unpaid time off to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law. This legislation has no effect on California’s Family Rights Act (CFRA).

Workers, Compensation – Quite a number of bills were signed into law in the past couple of years that relate to workers’ compensation. 2014 bills:  AB 1309AB 607AB 1376SP 146SB 809. 2015 bills: AB 1035AB 1746AB 2732.  Of note for employers is that SB 863 from 2012 created changes effective July 1, 2014  in the “Time of Hire” pamphlets that must be given out to all new employees. These changes include new regulations regarding the pre-designation of a personal physician, reporting duties of the primary treating physician, and language changes to the personal physician pre-designation and personal chiropractor/acupuncturist forms. Employers should contact their workers’ compensation carriers to ensure that they have the most up to date forms.

Background Checks – SB 530 (January 1, 2014) prohibits an employer from asking an applicant to disclose information on a conviction that has been expunged, sealed, or dismissed or from considering such information as a condition of employment. AB 218 (July 1, 2014) prohibits public employers from asking applicants for criminal background information until a determination has been made that the minimum job qualifications have been met.San Francisco’s Fair Chance Ordinance, effective August 13, 2014, prohibits private employers with at least 20 employees from inquiring about a San Francisco applicant’s criminal history on an employment application or in an initial interview. Berkeley, East Palo Alto, and Oakland, also have similar such prohibitions in place. AB 1650(January 1, 2015) prohibits contractors bidding on state contracts to require applicants for on-site construction jobs from disclosing criminal history on job applications. Of note for employers is that this is part of a national trend, gaining momentum to support “Ban the Box” laws, referring to legislation that would prevent employers from having a box to check on employment applications where the prospective employee is asked if they have been previously convicted of any crimes. The EEOC has also recently issued cautionary guidance about using criminal records only when job related and when consistent with business necessity. All while making it more challenging for employers to obtain criminal background information on its prospective employees, the state passed AB 1852, which effective January 1, 2015 requires all businesses who provide services to minors to provide written notice to the parents or guardians of these minors regarding the employer’s policies on employee criminal background checks.

Whistleblower Protections – The California Labor Code provides protections for employees who believe their employer is violating a federal or state law. SB 496 (January 1, 2014) expands these protections to cover an employee who reports an alleged violation of local government rules or regulations. It also protects employees who report alleged violations to a supervisory employee or any other employee who has authority to conduct an investigation or to correct the alleged violation. The law also prohibits retaliation against an employee who is believed to have disclosed or who may disclose information. In a similar development of expanding whistleblower protections, the US Supreme Court, in Lawson v. FMR LLC, ruled that the protections of Sarbanes-Oxley apply not only to the direct employees of a public company, but also to contractors like lawyers, accountants, and investment advisors. Additionally, President Obama signed the Intelligence Authorization Act for Fiscal Year 2014which provides expanded protections for whistleblowers who are intelligence agency employees.

Liability for Use of Contract Labor – AB 1897 (January 1, 2015) imposes liability for wage and hour violations, for securing workers’ compensation coverage, and for compliance with occupational health and safety regulations on employers who contract for labor from staffing agencies or other labor contractors. The legislation applies to private sector business who use contract labor and have 25 or more workers (including contract labor) or who have 6 or more contract labor workers at any given time. The liability will be imposed without consideration of whether the contracting employer had knowledge of the violations and irrespective of whether the client employer and the labor contractor are joint employers. While this new law will likely result in employers being more cautious about hiring through third party agencies, it explicitly does not prohibit the client employer from requiring indemnification from the staffing companies it uses.

Healthcare Coverage Waiting Periods – SB 1034’s aim was to resolve the confusion over waiting periods for group health insurance eligibility by permitting California employers to adopt the 90-day maximum waiting period allowed by the national Affordable Care Act. A prior CA law prohibited employers from implementing waiting periods that exceeded 60 days. Although it became effective for plan years beginning after January 1, 2015, many insurance carriers have allowed this change immediately. Employers should note that they may voluntarily offer shorter waiting periods.

Penalties and More Penalties – As if the penalties for non-compliance were not already significant for employers, the following pieces of legislation increased the liability for the following offences:

2014:

  • AB 1386 – allows the Labor Commissioner to assess a lien against an employers real property.
  • SB 390 – creates a criminal penalty and/or jail time for an employer who fails to remit withholdings from an employee’s paycheck that was required by law.
  • SB 462 – provides that employers who win wage claims can only recover attorneys’ fees and costs if the lawsuit was filed “in bad faith” by the employee.

2015:

  • AB 1723 – expands the penalties, restitution, and liquidated damages for an employer’s willful failure to timely pay wages to a terminating employee.
  • AB 2074 – establishes that the statute of limitations for filing a lawsuit for failure to pay minimum wage is 3 years, despite several recent court cases that held the claim had to be filed within one year.
  • AB 2288 – provides increased penalties for violations of CA child labor laws including treble damages for employment law violations that occurred while the employee was a minor and a penalty of $25,000 to $50,000  for violations involving minors 12 years of age or younger. It also “tolls” or extends, the statute of limitations for employment law violations until the minor is 18 years of age.

Local Ordinances

  • San Francisco’s Family Friendly Workplace Ordinance – became effective on January 1, 2014 and was amended on February 14, 2014. It requires covered employers of 20 or more employees to allow covered employees with caregiver responsibilities to request a flexible or predictable work schedule. The employer must consider the requests and respond to the employees within 21 days,  but is permitted to deny the request for various reasons. The law further provides for posting and recordkeeping requirements, and make the employee’s status as a “caregiver” protected.
  • San Diego’s Minimum Wage and Sick Leave Ordinance passed by the city council in July 2014 to increase the city’s minimum wage to $11.50 by 2017 and to require employers to provide paid sick days to employees at the rate of 1 hour of paid sick time for each 30 hours worked effective July 2015. After defeating a veto by the mayor, the council ultimately agreed  to put the matter on the June 2016 primary election ballot after opponents submitted enough signatures to require the council either to rescind the ordinance or allow the voters to decide its outcome.

What should employers do?
Review current Sick Leave, Vacation, or PTO policies to ensure compliance with new mandated Paid Sick Days law.

  • Update all employment posters as of 1/1/15 to include the current minimum wage and new Paid Sick Days Poster. Contact Vantaggio if you need a full set of new employment posters.
  • Begin using new Notice to Employees with new hires and issue an new notice to current employees to provide information required by new Paid Sick Days law.
  • Update your employee handbooks immediately due to various changes in employment law including new protected categories, new leave entitlements, and Paid Sick Days.
  • 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.
  • Make sure all employees who work outdoors are provided with the necessary Cool Down Rest Periods.
  • Review, or implement agreements with contract labor providers that indemnify your business for failure to pay required wages or secure valid workers’ compensation coverage.
  • Make sure to have updated workers’ compensation pamphlets and pre-designation forms in new hire packets.
  • Review all payroll rates and practices to avoid potential wage/hour claims and penalties.
  • Check with broker regarding modifying your healthcare coverage waiting periods.
  • Provide training to supervisors regarding harassment and discrimination in the workplace.
  • Evaluate your protections for whistleblowers.
  • Review your I-9 procedures and train employees responsible for I-9 completion in preparation for AB 60 driver’s licenses.
  • Plan your bi-annual Sexual Harassment Prevention training for supervisors and ensure that the training contains the new information about abusive conduct in the workplace.
  • Examine your criminal background check policies and procedures to ensure on-going compliance with evolving law.

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

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

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

2013 Employment Law Updates for California

2013 is proving to be a year chock-full of new employment-related laws and regulations for employers – even companies with as few as 5 employees! On the federal level, the National Labor Relations Board has been taking an aggressive approach to protecting employee’s rights to unionize and have been both scrutinizing company Social Media and Confidentiality policies and bringing legal action against non-unionized employers who inappropriately infringe upon employees’ rights to organize. Federal and state audits are on the rise over Independent Contractor Misclassifications, exempt and non-exempt status, and employees’ EEOC rights. California passed a number of new laws which impact the areas of Social Media, Religious Discrimination, Breastfeeding, Personnel and Payroll Records, Commissions, Overtime, Wage Garnishments, Intellectual Disabilities, and Unemployment. Additionally, new Pregnancy Disability Leave regulations were just implemented and major Workers’ Compensation Reform legislation has been passed.

The following is a brief description of a number (but not all) of new employment laws that unless otherwise stated, went into effect on 1/1/13:

Social Media – Employers are now prohibited from requiring or requesting that an employee provide his/her username or password in order to gain access to the employee’s social media. Employers may also not request or require that an employee access his/her social media in the employer’s presence or divulge information about social media. Employers are explicitly prohibited from discharging, disciplining, or retaliating against an employee for his/her refusal to cooperate with such requests or demands. An employer, however, is permitting to request that an employee divulge social media in order to conduct an investigation surrounding workplace misconduct, as long as the information is used solely for that purpose. To read the new law, see:  AB 1844.

Religion and Reasonable Accommodation – Employers have been prohibited from discriminating, harassing, or retaliating against an employee based on the employee’s religion. This new law adds the employee’s “religious dress practices” and “religious grooming practices” to those protections. The law states that those terms will be very broadly construed and employees will be protected as long as practices such as wearing or carrying of religious clothing, head or face coverings, jewelry, head, facial and body hair, etc. are part of the observance of a religious creed. Employers must engage in a process of reasonable accommodation with employees whose practices fall under these protections, but the law cautions employers that segregating certain employees from co-workers or the public would not be considered reasonable. For more details, see: AB 1964.

Pregnancy Disability Leave – As a reminder, Pregnancy Disability Leave law applies to all CA employers with 5 or more employees and requires employers to provide unpaid leaves of absence of up to 4 months to employees disabled by pregnancy, childbirth, and related medical conditions as well as job transfers and other accommodations to employees impacted by pregnancy, childbirth, or related medical conditions. Last year, SB 299 required all employers effective 12/1/12 to maintain employees’ health benefits for up to a maximum of 4 months during a Pregnancy Disability Leave under the same terms and conditions as applied prior to the employee going out on leave. Effective 12/30/12, the new regulations make significant changes to existing law including: (1) a change to the definition and calculation of 4 months of leave; (2) an expansion of the term “disabled” by pregnancy; (3) details about what constitutes reasonable accommodation for pregnant employees; (4) increased protections for employees who are both pregnant and “perceived to be” pregnant; (5) more stringent notice requirements for employers; (6) details about the permissibility and administration of requesting medical certification; (7) further clarification of an employer’s responsibility to maintain benefits during leave; (8) guidance of the administration of intermittent leave; (9) coordination with California Family Rights Act (CFRA) and the Americans with Disabilities Act (ADA), (10) updates of posters “A” and “B” that must be displayed in the workplace describing employees’ rights. Most employers, especially smaller ones, can no longer afford to handle employee pregnancies casually.

Breastfeeding – Employees are protected against discrimination, harassment, and retaliation based upon sex, and sex is further defined under the law to include pregnancy, childbirth, and related medical conditions. This new law adds breastfeeding and medical conditions related to breastfeeding to that protection. Note that both under federal and state law, breastfeeding mothers must be afforded a reasonable amount of additional break time if needed to express breast milk during the workday and must be provided with an area in which to conduct this activity in private that is in close proximity to the employee’s work area, and is not a bathroom. For more details, see: AB 2386.

Personnel and Payroll Records – Surprisingly, several new laws on these topics are creating a large amount of confusion. Currently, employers are required to allow employees access to their personnel files provided the employee provides advance notice. Employees are also entitled to receive a copy of any document in their personnel files which contains their signature. AB 2674 has been widely discussed on the internet as being a law which changes and clarifies these rights to personnel records, when in fact it really applies only to certain payroll-related information. Labor Code Section 226(a) details that an employee’s paycheck must be accompanied by a wage statement containing: (1) gross wages; (2) total hours worked unless the employee is an exempt, salaried employee; (3) number of piece-rate units earned; (4) all deductions; (5) net wages; (6) dates of the pay period; (7) employee’s last name and last 4 digits of SSN or an employee ID number; (8) name, address of legal entity who is employer; (9) all applicable hourly rates in effect during the pay period. This information must be kept on file by the employer for at least 3 years. Current and former employees must be allowed to inspect and obtain a copy of this specific information (not everything in the personnel file) upon reasonable request by the employee, and the employer must respond to such requests within 21 days. The law clarifies penalties for non-compliance that may be assessed against the employer if the employee is “injured” by the employer’s failure to comply which would include: (1) not providing a wage statement; (2) providing a statement that was incomplete or inaccurate; or (3) providing a statement on which certain information is not “promptly” and “easily” understood. Additional compliance measures have been imposed on staffing agencies including needing to provide information about the legal employer on the “Notice to Employees” which became mandatory for all newly hired non-exempt employees effective 1/1/12 and a requirement to provide the rate of pay and hours worked on each temporary assignment on an employee’s paystub each pay period. Several new laws apply:  AB 2624, AB 1744, and SB 1255.

Commission Plans – Passed in 2011, AB 1396 required all California employers to document commission plans for any employees who are paid in whole or in part by commission. The written document must describe the method by which commissions will be computed and paid. The employer must sign the contract, provide a signed copy to the employee, and receive a signed receipt from the employee. “Commissions” are given the same definition as in the California Labor Law Code – if the compensation is based upon a percentage of the sale of the employer’s goods or services, a commission plan exists. A new law clarifies some of these requirements by describing that the following are not considered “commissions” – short-term productivity bonuses<, and AB 2675.

Fixed Salaries and Overtime – In 2011, a California Court of Appeals in Arechiga v. Dolores Press, ruled that an employer was permitted to pay a non-exempt employee a fixed salary which included a fixed number of regular overtime hours, provided that the salary was calculated using 1.5 times the employee’s regular hourly rate of pay for the overtime hours included in that salary. This new law overturns that decision and modifies the CA Labor Code by describing that a salary paid to any non-exempt employee is deemed to be payment only for regular hours worked, and not overtime. See the details here:  AB 2103.

Wage Garnishments – Effective for garnishments issued after 7/1/13, California will no longer align with the federal standards for computing the amount of garnishment that may be taken from an employee’s paycheck. Currently, an employer cannot withhold the lesser of 25% of the employee’s weekly disposable earnings OR the amount by which the disposable earnings exceeds 30 times the federal minimum wage ($7.25). The new rules in California will be that an employer cannot withhold the lesser of 25% of the employee’s weekly disposable earnings OR the amount by which the disposable earnings exceeds 40 times the state minimum wage (currently $8.00). The details can be found here:  AB 1775.

Human Trafficking Poster – Effective 4/1/13, certain service organizations (businesses with liquor licenses, adult or sexually-oriented businesses, ER and urgent care, airports, passenger, light rail and bus stations, truck stops, etc.) will be required to post a notice about the illegality of human trafficking and slavery which includes information on resources for potential victims. Samples of the notice will be made available by the Department of Justice. For more information, see:  SB 1193.

Intellectual Disability – Two new bills amend a number of existing statutes and regulations by substituting the term “intellectual disability” for the words “mental retardation.” Furthermore, it adds “intellectual disability” to the Fair Employment Housing Act’s list of protected categories. To read details, see: AB 2370 and SB 1381.

Unemployment – The CA Employment Development Division (EDD) can deny reimbursement to an employer for unemployment benefit overpayments that resulted from the employer’s failure to respond to a claim or to provide adequate information that would have influenced the payment of benefits. This new law will apply to overpayments starting on 10/22/13 when both the employer and the employer’s agent will be subject to penalties if the employer, its agent, an officer, or an employee willfully make false statements or fail to report facts relating to an unemployment claim. The penalty will range from 2 to 10 times the weekly benefit amount. For more information, see:  AB 1845.

Workers’ Comp – While increasing the amount of permanent disability benefits, this new law is geared to enact comprehensive reform within the work comp system. It targets cutting costs by reducing delays and litigation, addressing the problem of liens, shortening the medical/legal process, implementing an independent medical review system, streamlining the permanent disability schedule, and other changes. The text of the law itself is almost 200 pages. While some provisions go into effect immediately, others will require further administrative/regulatory action before implementation. As of now, it is too soon to judge just how impactful and effective these reforms will be. For a good synopsis of the law, see this article on the DIR’s website:  Overview of SB 863.

What should employers do?

  • Update your employee handbooks for compliance in the areas of protected categories, social media, confidentiality, employee conduct, personnel files, and Pregnancy Disability Leave.
  • Ensure that your workplace posters are updated for 2013, including the new PDL and Human Trafficking posters.
  • Ensure that you have the appropriate notices, forms, and letters to administer employees’ requests for Pregnancy Disability Leave, transfer, or other accommodation.
  • Review your payroll record and personnel file maintenance procedures to avoid potential penalties. Discuss new compliance requirements with your payroll provider.
  • Review internal procedures or discuss compliance with your payroll provider regarding wage garnishment.
  • Document your commission plans.
  • Ensure that you’re maintaining benefits during pregnancy disability leaves.
  • If you have not done so already, provide the DLSE Notice of Pay Details to all non-exempt employees which became required in CA on 1/1/12.

If you need additional information about any of the above information or if you would like help with making the necessary compliance changes, please give us a call. Vantaggio can help with specific projects or can conduct a complete HR audit for your company.

Help! The NLRB is Making Me Crazy!

Most business owners and HR professionals with non-unionized employees have had a tendency to turn a blind eye on the National Labor Relations Board. We know that the National Labor Relations Act gives our employees the right to organize, but other than that, we don’t think it impacts our day-to-day management all that much. Think again!

In recent months, the NLRB has issued two lengthy memoranda regarding the legality of employers’ social media policies and practices.

The NLRA provides certain protections to non-supervisory employees including the right to organize and to engage in other “concerted activities.” Specific examples include employees’ efforts to improve working conditions and terms of employment, including discussions of wages and benefits. Employers are not allowed to prohibit such protected activity, nor are they allowed to do anything to discourage, dissuade, or have a “chilling” effect on these activities.

To get a true flavor for what we’re dealing with, here are some examples of policies that the NLRB described as illegal:

  • A policy that “prohibited employees from using any social media that may violate, compromise, or disregard the rights and reasonable expectations as to privacy or confidentiality of any person or entity.”NLRB’s reasoning – deemed unlawful because it did not provide a definition or guidance as to what the employer considered private or confidential and, as such, could reasonably be interpreted as prohibiting things such as a discussion of wages or other working conditions.
  • A policy that “prohibited any communication or post that constitutes embarrassment, harassment or defamation of the [Company] or of any [Company] employee, officer, board member, representative, or staff member.”NLRB’s reasoning – the statements were overbroad and could be interpreted as prohibiting employees from discussing working conditions.
  • A policy that “prohibited defamation of the [Company].”NLRB’s reasoning – “an alleged defamatory statement will not lose its protected status unless it is not only false but maliciously false.” OK, so now it’s illegal to have a policy that states that employees are prohibited from doing something illegal?
  • A policy with a prohibition against “statements that lack truthfulness or that might damage the reputation or goodwill of the [Company], its staff, or employees.”NLRB’s reasoning – the statements were overbroad and would commonly apply to protected criticism of the employer’s labor policies or treatment of employees. Again, now we’re not allowed to tell employees that they have to be truthful? Help!

Is this making you crazy yet?

So, from a practical perspective, what can an employer do? First of all, think long and hard about whether or not you even want to try to have a company policy on social media. It might not be worth it. Secondly, if you have a policy or decide to craft one, be very careful. Then, go back and revisit your entire employee handbook and other employment agreements. Even outside policies on computer usage and social media likely contain language on privacy, confidentiality, employee conduct, etc. that may now be questionable in the NLRB’s eyes. Finally, whether or not you have a written policy, before taking any adverse action against an employee for actions that might fall into this very broad spectrum of concerted protected activity, seek help from a professional with experience in employment law.

And stay tuned. We have certainly not heard the last of this topic. HR professionals need to share our resources with one another to help prevent any of us from being “un-friended” by the NLRB!

Meal Periods – What does the Brinker Case Mean for California Employers

After 3 years since it first granted hearing the case, the California Supreme Court finally issued a decision in the now famous Brinker Restaurant Corp. v. Superior Court. The fundamental question at hand was whether or not an employer is required to make sure that employees take their required meal periods. The court ruled that an employer has met its obligation to “provide” a meal period by “relieving the employee of all duty,” but is not required to “ensure” that meal periods are actually taken. In addition to this good news that employees can now opt out of a meal period, the Brinker decision also clarified the timing of these breaks, but also threw us a few curve balls…

Background

Existing California labor law states that, “An employer may not employ an employee for a work period of more than five hours per day without providing the employee with a meal period of not less than 30 minutes, except that if the total work period per day of the employee is no more than six hours, the meal period may be waived by mutual consent of both the employer and employee.” Additionally, “An employer may not employ an employee for a work period of more than 10 hours per day without providing the employee with a second meal period of not less than 30 minutes, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the employer and the employee only if the first meal period was not waived.” If a meal period is missed or is cut short, the employer is responsible for paying the employee a penalty of one hour extra pay.

The Old Questions

There have been a number of questions that employers and the courts have struggled with:

  • Does the employer have to police its meal period policy?
  • If an employee decides to skip a meal period, does the employer still need to pay the 1 hour penalty?
  • When does the first meal period actually have to happen?
  • Does the eligibility for a second meal period and its timing depend upon when the first meal period was taken?

Brinker’s Answers on Meal Periods

The Brinker decision clears up a number of those old questions and provides increased flexibility for employers and employees. Here’s what they said:

  • Meal periods are considered “provided” as long as they are “made available” to employees. If the employee is afforded the opportunity to be relieved of all duty, the employer has met its obligation. The employer, however, cannot pressure an employee to skip a break.
  • Employers do not need to ensure that meal periods are actually taken.
  • Employees may elect to skip a meal period or take a short break without the payment of any penalty. Regular wages are due for any time actually worked including any overtime that might incur as a result of the missed or short meal period.
  • If the employer prevents the employee from taking the meal period or causes the break to be less than 1/2 hour, the penalty is still due.
  • The required first 1/2 hour meal period must begin no later than the end of the employee’s 5th hour of work. The second meal period must begin before the end of the 10th hour of work.
  • “Early” lunching is permitted and does not cause the employee to be eligible sooner for a second meal period. In other words, the employer does not have to provide a meal period every 5 hours (no rolling meal periods).
  • On-Duty meal period waivers and waivers for shifts that do not exceed 6 hours remain unchanged.

Brinker’s Surprises on Rest Breaks

Existing California law requires employers to provide 10-minute paid rest breaks to employees for each four hours of work “or major fraction thereof.” In what took many of us by surprise, Brinker ruled that “major fraction thereof” means 2.5 hours.

  • Existing law requires no rest breaks for shifts of less than 3.5 hours, this remains unchanged.
  • One 10-minute rest break is due for shifts lasting from 3.5 to 6 hours.
  • Two 10-minute rest breaks are due for shifts that are longer than 6 hours and up to 10 hours.
  • Three 10-minute rest breaks are due for shifts that are longer than 10 hours and up to 14 hours.
  • The 1st rest break of the day does not necessarily have to come before the 1st meal period.
  • The employer must make a good faith effort to provide rest breaks as close to the middle of a shift as possible, but can deviate where practical considerations render it infeasible. However, the Court cautioned that during a normal 8 hour day, the employer would be hard-pressed to justify having both rest breaks either before or after the meal period.
  • As before, the employer must provide rest breaks, but is not required to ensure they’re taken. However, if the employer causes the break to be missed, the one-hour penalty must be paid.

The New Questions

While providing a lot of very clear guidance and clarification, the Brinker ruling unfortunately raises its own set of new issues:

  • How does an employer prove that it made the lunch break available? Brinker has told us that what will suffice will vary from industry to industry. What might be some best practices?
  • If “early lunching” and skipping meal periods are now permitted, can an employee now elect to take late lunches that begin after the end of the 5th hour of work?
  • As the burden of proof is on the employer to show that missed or short lunch breaks were taken at the discretion of the employee, how does the employer prove this?
  • Now that California law will allow the employee to take a short meal period, can this break be unpaid? Federal law generally only allows a meal period to be unpaid (with narrow exceptions) if it is no shorter than 1/2 hour.

What should employers do?

As the Brinker ruling takes effect immediately, employers should:

  • Decide if you want to allow employees to skip or take short meal periods;
  • Update your employee handbook polices on meal periods and rest breaks;
  • Decide how you will prove that you are making meal periods available;
  • Review your timekeeping systems;
  • Decide how you will document that the employee has requested to skip or take a short meal period;
  • Determine what your pay practices will be with regards to short meal periods;
  • Educate your managers, your payroll department, and your employees on the new rule

Come join us at Vantaggio HR’s offices for an interactive training session on the impact of Brinker on an employer’s policies and practices. Thursday, May 10th from Noon to 1:30 pm. Click here to sign up for the Lunch & Learn and for more information.

NLRB Poster on Employee Rights Indefinitely Postponed

The National Labor Relations Board has announced that the requirement for private employers to post its new Employee Rights poster has been indefinitely postponed.

In late 2012, the NLRB issued a ruling that would have required all private employers (not just employers with unionized workers) within the NLRB’s jurisdiction to post a notice apprising employees of their rights to organize and to engage in other concerted protected activities (for more information about this topic, see Vantaggio’s article Help! The NLRB is Making Me Crazy!) The posting date was originally November 15, 2011, then delayed to January 31, 2012, and most recently pushed to April 30, 2012.

The delays were caused by a flurry of lawsuits over the matter, with decisions that kept going back and forth. Some courts found the NLRB within its rights to mandate the posting; others did not, with arguments that ranged from violations of employers’ rights to free speech to assertions that the NLRB was overstepping its legal bounds. And all of this comes at a time where other courts are challenging the authority of the sitting board of the NLRB based upon the allegation that some of its members were inappropriately appointed by the President without going through Senate approval.

Finally, on April 17, 2012, a DC Circuit Court of Appeals enjoined the NLRB from requiring employers to post the notice, causing the NLRB to post its own notice on its website (we’re enjoying the irony in that!) stating that the requirement has been “temporarily” postponed. Most private employers can sit tight for the moment; however, federal contractors and subcontractors should note that they have pre-existing NLRA posting requirements that remain unchanged by these recent developments.

Independent Contractor Misclassification Penalties Now Severe

SB 459 goes into effect
on January 1, 2012 and is probably the most significant piece of new
employment-related legislation for California employers this year. The
“willful” misclassification of independent contractors will become in
and of itself an unlawful act that will subject an employer to fines of $5,000
to $25,000 for each violation as well as other significant disciplinary action.
These new penalties are in addition to any back taxes or other liabilities
resulting from the misclassification.

Background

There has always been risks for an employer who misclassifies a worker as an independent contractor which include back taxes, penalties, interest, unpaid personal incomes taxes of the misclassified worker, overtime, benefits, leave entitlement, and other rights and protections due to employees. The process of determining independent contractor status has never been an easy one. Different federal and state agencies use their own tests and criteria for making these determinations. While how much control the employer exercises over the work performed is a determining factor in all situations, the real-life situations in which employers find themselves are often “muddy” at best. Back taxes, penalties and interest alone can amount to as much as 70% of what was paid to the misclassified worker and an audit can go back 3, sometimes 4 years. For additional information about the criteria used by several federal and state agencies, click here: Vantaggio HR Info Bulletin – Independent Contractors vs. Employees-CA.

New California Rules

Effective January 1, 2012, employers are prohibited from the “willful misclassification” of independent contractors which the law defines as “avoiding employee status for an individual by voluntarily and knowingly misclassifying” the person. Given the complexity of the analysis required to make an accurate determination, and given how case-specific these determinations must be, we find this new definition to be disappointingly unclear. Our concern is that an employer who makes a good faith determination of independent contractor status might still be found to have engaged in a willful misclassification if they get it wrong. Employers are further prohibited from making any deductions from the compensation of independent contractors that would have violated the law if the worker had been correctly classified as an employee. Such illegal deductions would include the costs of goods, materials, space rental, services, licenses, repairs, equipment maintenance, fines, etc.

The civil penalties that will be assessed range from no less than $5,000 to $25,000 per violation, depending upon whether the employer is found to have engaged in a “pattern or practice” of such violations.

In addition to the new, severe penalties for employers, companies and individuals (other than the employer’s own internal staff or legal counsel) who help advise clients on such misclassifications can now be found jointly and severally liable under the law.

Employers who are licensed contractors who commit willful misclassification will now also be reported to the Contractors’ License Board which will in turn be required to take action against the licensee.

And perhaps the most surprising disciplinary action imposed by this law is that employers found to have engaged in a willful misclassification will be required to post on their internet site (or in another area accessible to all employees and the general public) for a period of 1 year a notice that includes the following: (1) that the person or employer has committed a serious violation of the law by engaging in the willful misclassification of employees; (2) that the person or employer has changed its business practices in order to avoid committing further violations; (3) that any employee who believes to have been misclassified may contact the Labor and Workforce Development Agency (along with the LWD’s complete contact information); (4) that the notice is being posted pursuant to a state order; and finally (5) the signature of an officer of the company.

For a full review of the new law, see California SB 459.

At the Federal Government Level

The concern over misclassified independent contractors is not specific to California. The U.S. Department of Labor announced that in their 2011 budget, an additional $25 million was being set aside for an initiative to target misclassification of independent contractors. Part of that money was to be used for hiring approximately 100 additional enforcement personnel and “competitive grants” to boost states’ incentives and capacity to address this problem. The Obama administration announced that they expect this initiative to generate over $7 billion in federal tax revenue over the next 10 years.

Ironically, at the same time that California is implementing increased punishment for employers who misclassify independent contractors, the federal government has introduced an amnesty program to help employers resolve past misclassification issues and reduce the past federal payroll taxes due.

The Voluntary Classification Settlement Program (VCSP) was launched by the IRS on September 21, 2011. To be eligible for the program, the employer must: (1) have consistently treated the workers in question as independent contractors in the past; (2) have filed all 1099 forms for the workers for the past 3 years; (3) not currently be under audit by the IRS; and (4) not currently be under audit by the Department of Labor or a state agency concerning the classification of these workers.

The IRS has stated that employers who are “accepted” into the program will pay an amount effectively equaling just over one percent of the wages paid to the reclassified workers for the past year. No interest or other penalties will be due, and the employers will not be audited on payroll taxes related to these workers for prior years. However, it’s very important to note that participating employers will, for the first 3 years under the program, be subject to a special six-year statute of limitations, rather than the usual 3 year statute. Additionally, employers need to remember that federal payroll taxes are only one of the many liabilities for misclassification. A clear concern is that reclassifying a worker from independent status to employee status (especially if done mid-year) may alert other agencies and/or the worker to other areas of potential recovery for things such as unpaid overtime, missed meal and rest periods, other employee benefits, workers’ compensation benefits, state payroll taxes, unemployment benefits, etc. We would advise exercising extreme caution and due diligence before enrolling in this partial amnesty program.

What should employers do?

  • Make sure you are aware of the independent contractors that your company is using.
  • Perform a review of each independent contractor to make sure the person would meet the legal criteria.
  • Do not assume that someone is an independent contractor just because you are told that he/she has their own business, has a website, has their own corporation, etc. While these are factors that can help show true independent contractor status, the totality of the situation and what the person is actually doing for your company must be taken into consideration.
  • If any current contractors do not meet the requirements or are questionable, convert them to employee status. Consider fixing the problem retroactively to reduce your total liability.
  • For independent contractors who would legitimately pass the tests, make sure you have a well-drafted written agreement in place as well as documentation that would help you prove that your classification was legitimate (a copy of the contractor’s business license, proof of business insurance, copies of all 1099 forms filed, etc.)

In summary, the risks for misclassifying an independent contractor are significant! There is no substitute for competent, case-specific advice. Please contact us if you require assistance and consider seeking legal counsel from an attorney experienced in this particular area of employment law, and/or a formal, written determination from the EDD and/or the IRS.

 

Pregnancy Leave Benefits must now be Maintained under CA Law

Governor Brown recently signed legislation that effective January 1, 2012 will require employers in California with as few as 5 employees to maintain health insurance benefits for up to a maximum of 4 months under a California Pregnancy Disability Leave (PDL).

Background

Existing California law, under the Fair Employment and Housing Act, requires employers with 5 or more employees to provide up to 4 months (88 days for full-time, pro-rated for part-time employees) of unpaid PDL for employees who are disabled by pregnancy, childbirth, or related medical conditions. Up until now, smaller employers have not been required to maintain health insurance benefits during a PDL leave, unless the employer provides benefit continuation for other non-pregnancy disability leaves. It is important to note that PDL only covers an employee during a period of disability where her doctor has established that she is physically unable to work. Once a doctor releases an employee to return to work – even if the employee elects and is allowed to take additional leave to stay at home with a new child – the protection under PDL ends. A pregnancy leave is therefore not automatically 4 months – it will be for the duration of disability as determined by a doctor up to a maximum of 4 months.
Until reaching 50 employees when federal Family Medical Leave (FMLA) would also apply, employers have had the discretion to decide the length of time, if any, that the company would continue to pay for medical benefits during a PDL leave. Some have opted to maintain benefits during a portion or all of the leave. Many employers, however, have elected to place employees who take PDL on COBRA where the employee then pays the full cost of her insurance during the leave.

New Rules

Effective January 1, 2012, all employers with 5 or more employees will be required to maintain benefits during a PDL leave for up to the maximum duration of leave (4 months) under the same terms and conditions as would apply if the employee had not gone out on leave. If the employer pays 100% of the cost of benefits, the company will need to continue to pay the full cost during PDL. If the employee contributes towards the cost of her coverage, she can be required to continue making these payment contributions during the leave. If the employee fails to return from a PDL leave, the employer may recoup the cost of the employer premiums paid during the leave, unless the reason for the employee’s failure to return is the result of a continuing disability, due to the employee taking additional protected leave under California Family Rights Act (CFRA), or other circumstance beyond her control

Leave Interaction

Larger employers who have over 50 employees are not only covered by California PDL law but also fall under the purview of the federal FMLA which currently does require employers to maintain benefits for up to 12 weeks in any 12-month period for leaves which include pregnancy disability leaves. Effective January 1, 2012, benefits continuation during a pregnancy disability leave that is also covered by FMLA can no longer be capped at 12 weeks.

CFRA is the state counterpart to FMLA, but oddly enough does not recognize pregnancy as a disability. As a result, an employee could take up to 4 months of unpaid pregnancy disability under PDL/FMLA, and could then qualify for an additional 12 weeks of unpaid leave under CFRA – not for disability, but now for “baby bonding” leave or what we more frequently refer to as “maternity” leave. This type of leave is not predicated upon the employee being disabled and unable to work, but rather results from the employee taking additional time off to stay at home and bond with a new child. When PDL/FMLA leave is then followed by a baby-bonding CFRA leave, the total possible leave is close to 7 months (up to 4 months of PDL followed by up to 12 weeks under CFRA). However, the maximum amount of time that benefits will be required to be kept in place will be the new 4-month rule – not the full 7 months of possible leave.

For a full review of the new law, see California SB 299.

What should employers do?

  • Perform a detailed review and update of your employee handbooks to reflect the new rules.
  • Review and update any internal forms, letters, or other notices that are used to administer pregnancy leaves.
  • Make sure you have established clear policies and procedures for employees to pay their share towards their benefits while they are out on leaves of absence./li>
  • Be sure to have sound COBRA administration services in place to ensure that the proper notices are sent to any employees who do end up staying on leave for longer than the law provides for benefit continuation.
  • Provide training and guidance to your supervisory, payroll, and leave administration employees.

As you can see from the above, leave administration can be very complicated in California. Please be aware that the above article is a brief and cursory discussion of these three types of protected leaves. The actual terms and conditions, eligibility, and benefits for each type of leave are complex and varied.
If you would like more information about how Vantaggio can help you with leave and/or COBRA administration, please call us or click here for details on some of the products we offer: Vantaggio HR’s Leave Administration Kit; Vantaggio HR’s COBRA Notice Kit.

2012 Employment Law Updates for California

On October 9, 2011, Governor Brown addressed a number of employment-related bills that had been passed by the state legislature. While he vetoed several bills stating that they would be harmful for California businesses, he did sign into law quite a number of bills that are NOT good news for employers. Some of the areas impacted are significantly increased penalties on Independent Contractor Misclassifications, restrictions on the use of Credit Reports for employment purposes, redefined protected employment categories based on Genetic Information and Gender Identity, newly mandated Notice of Pay Details upon hire, Commission Agreements required to be in written contracts, and additional protections for employees on Pregnancy Disability and California Family/Rights Act Leaves.

The following is a brief description of a number of new employment laws that unless otherwise stated, go into effect on January 1, 2012:

Independent Contractor Misclassification Penalties – Employers who engage in “willful misclassification” of workers as independent contractors instead of employees will now be subject to severe civil penalties that include fines of $5,000 to $25,000 per violation plus other disciplinary measures. For more details, please see Vantaggio’s separate article Independent Contractor Misclassification Penalties Now Severe.

Pregnancy Disability Leave – Employers with 5 or more employees will now be required to maintain health insurance benefits for up to 4 months for an employee who goes out on a PDL leave. For more details, please see Vantaggio’s separate article Pregnancy Leave Benefits must now be Maintained under CA Law.

Credit Reports – This new law prohibits an employer or prospective employer (with the exception of certain financial institutions) from obtaining a consumer credit report for employment purposes unless the position is (1) in the state Department of Justice; (2) a managerial position (defined as an exempt executive); (3) a sworn peace officer or other law enforcement position; (4) a position for which a credit report is required by law; (5) a position that involves regular access, for any purpose other than routine solicitation and processing of credit card applications in a retail establishment, to all of the following types of information of any one person: bank or credit card information, social security number, and date of birth; (6) a position in which the person is a named signatory on the bank or credit card account of the employer, able to transfer money on behalf of the employer, or authorized to enter into financial contracts on behalf of the employer; (7) a position that involves access to confidential or proprietary information; or (8) a position that involves regular access to cash totaling $10,000 or more. The law will also require changes to the written notice that is given to a person when a credit report is being obtained, namely the employer will now need to specify which of the above reasons applies. For a full review of the new law, see California AB 22.

E-Verify – The U.S. Department of Homeland Security and the U.S. Social Security Administration have partnered to create the E-Verify system which allows participating employers to use the program to verify that the employees they hire are legally authorized to work in the United States. The program is currently voluntary for most employers other than government contractors. However, certain states and municipalities across the country have passed legislation mandating the use of E-Verify for certain or all employers in their jurisdiction. This new law prohibits the state of California, a city, a county, or district from requiring a private employer to use E-Verify. E-Verify presents a number of challenges which include information that is not always up to date, technology and training demands, and complex procedural requirements. Additionally, we find that many employers mistakenly believe that the use of E-Verify takes the place of the I-9 process and often use the system to perform checks on current employees which is prohibited. Due to these concerns and the risk of creating greater liability for themselves, our recommendation is that employers should not use E-Verify unless required to do so by law. For a full review of the new law, see California AB 1236.

Notice of Pay Details – AB 469, entitled “The Wage Theft Prevention Act of 2011” increases a number of penalties associated with an employer who fails to make correct wage payments, imposes new disclosure requirements on farm labor contractors, and increases the statute of limitations for the DLSE to collect penalties from 1 to 3 years. It also creates a new Notice of Pay Details that must be given to all non-exempt employees (other than government employees or employees covered by a collective bargaining agreement who earn no less than 30% more than minimum wage) at the time of hire. The notice must include (1) The rates of pay and the basis whether by the hour, shift, day, week, salary, piece, commission, or otherwise; (2) any allowances claimed as part of minimum wage such as meal or lodging allowances; (3) the regular payday established by the employer; (4) the name of the employer including any “doing business as” (DBA) names; (5) the physical address of the employer’s main or principal place of business and a mailing address if different; (6) the phone number of the employer; (7) the name, address, and phone number of the employer’s workers’ compensation carrier; and (8) “any other information the Labor Commissioner deems material and necessary.” Finally, an employer will be required to notify an employee in writing if any of the above information changes. Such notification must be within 7 calendar days of the change unless all changes are reflected on a timely wage statement or if notice is given through another legally required document with 7 days of the change. The DLSE is supposed to provide a template form to be used. For a full review of the new law, see California AB 469.

Commission Plans – Existing statutory law, which has been invalidated by existing case law, requires an employer who has no permanent and fixed place of business in California and who enters into a payment agreement that involves commissions for an employee who will perform services in the state to put the contract in writing. This bill would extend this written contract requirement to all employers effective January 1, 2013. The document must describe the method by which commissions will be computed and paid. The employer must sign the contract, provide a signed copy to the employee, and receive a signed receipt from the employee. “Commissions” are given the same definition as in the California Labor Law Code – if the compensation is based upon a percentage of the sale of the employer’s goods or services, a commission plan exists. “Commissions” does not include short-term productivity bonuses nor bonus or profit-sharing plans unless a fixed percentage of sales or profits is provided for work performed. In our experience, commission plans are often a source of confusion, misunderstanding, and thus complaints and litigation by employees. A well documented plan is essential and should include definitions of terms, details regarding timing of payments, how outstanding commissions will be handled upon termination, etc. For a full review of the new law, see California AB 1396.

Interference with CFRA and PDL – Existing California law under the California Family Rights Act (CFRA) makes it unlawful for an employer with 50 or more employees to refuse to grant an eligible employee up to 12 weeks of unpaid leave during any 12-month period to (1) bond with a new child, (2) care for an immediate family member with a serious health condition or (3) because of the employee’s own serious health condition. Under the California Fair Employment and Housing Act, employers with 5 or more employees are prohibited from refusing to allow an employee affected by pregnancy, childbirth, or related medical conditions to take leave for a reasonable period of time not to exceed 4 months or to be provided reasonable accommodation for such conditions. This new law makes it an unlawful practice for an employer to interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right provided under these laws. This new language is similar to the provision already contained in the federal Family Medical Leave Act (FMLA) and as such do not present a major change to an employer’s obligations. In fact, the law actually states that the changes it makes are simply a declaration of existing law. For a full review of the new law, see California AB 592.

Discrimination Based on Genetic Information – Existing California law already has significant statutory protections against the use of genetic information for employment purposes. One example is the California Fair Employment Housing Act (FEHA) which prohibits employers from discriminating against an employee based upon a number of factors including the employee’s medical condition which includes “genetic characteristics.” As such, this new legislation does not present a major change for most employers. It does, however, amend the FEHA and the Unruh Civil Rights Act to explicitly add “genetic information” to the list of prohibited bases for discrimination. The new language is very similar to the federal Genetic Information and Non-Discrimination Act (GINA) and defines “genetic information” as an individual’s genetic tests, the genetic tests of family members of the individual, and the manifestation of a disease or disorder in family members of the individual, and the request for, or receipt of, genetic services or clinical research that includes genetic services. For a full review of the new law, see California SB 559.

Discrimination Based on Gender Identity and Expression – In 2003, FEHA was amended to add gender “perception” or “identity” to the list of prohibited bases for discrimination. That legislation changed the definition of “sex” to include a person’s gender as defined under other California law, providing protection to cross-dressing and transgender individuals. This new law really only makes technical changes to a number of existing laws by including the terms “gender, gender identity, and gender expression” to the list of protected categories. It further defines gender expression as a person’s gender-related appearance and behavior whether or not stereotypically associated with the person’s assigned sex at birth. While not a new requirement, employers should be reminded that employees must be allowed to dress consistently with their gender expression. For a full review of the new law, see California AB 887.

What should employers do?

  • Review your independent contractor relationships for compliance.
  • Update your internal procedures, notices, and forms to reflect the new 4-month benefit continuation requirements for PDL leaves.
  • Review and update your employee handbook to ensure all new legal requirements are incorporated, especially with regards to medical insurance during PDL, FMLA, and CFRA leaves as well as an updated and complete list of protected categories.
  • Check with your third-party background and credit check company to ensure that the written notices provided to employees or applicants will now contain the reason for the credit report.
  • Review and amend hiring documents to comply with the Notice of Pay Details requirements.
  • Begin documenting all commission agreements.

If you need additional information about any of the above information or if you would like help with making the necessary compliance changes, please give us a call. Vantaggio can help with specific projects or can conduct a complete HR audit for your company.

Workers’ Compensation Notice Changes for All California Employers

The State of California, Department of Industrial Relations, Division of Workers’ Compensation (DWC) has amended regulations and related notices, forms, and posters regarding information all CA employers must provide to employees about their rights and obligations under workers’ compensation, particularly involving Medical Provider Networks (MPNs).

All California employers need to implement changes effective October 8, 2010.

As you may know, an MPN is a network of physicians and other providers created by California workers’ compensation insurers or self-insured employers and approved by the DWC. An MPN provides medical treatment for work-related injuries and illnesses. While not all workers’ compensation plans use MPNs, since 2005 when the program was first implemented, many plans have adopted them as a way to control the costs and effectiveness of delivering medical care under the state’s workers’ compensation program.

Current workers’ compensation regulations require, amongst other things, that all employers do the following:

  • Provide a pamphlet with general information about workers’ compensation coverage to all new employees;
  • Post the general workers’ compensation informational poster entitled, “Notice to Employees-Injuries Caused by Work” (DWC 7);
  • Provide an injured worker with a “Workers’ Compensation Claim Form and Notice of Potential Eligibility” DWC 1);
  • Provide all new employees with an MPN notice 30 days prior to the implementation of an MPN, at the time of hire, or when an employee currently receiving treatment outside of an MPN transfers into the MPN, “whichever is appropriate to ensure that the employee has received the initial notification.” The MPN notice must also be provided again to an employee at the time of an injury. Most employers have understood that they needed to provide this notice under all of these circumstances. This has been a source of confusion.

The new regulations make the following key changes to the current requirements effective October 8, 2010:

  • The new employee pamphlets must now include updated information on MPNs;
  • The DWC 7 poster has been updated;
  • The DWC 1 claim form has been updated;
  • At the time of first implementing an MPN or when an employee is hired where an MPN is utilized, an employer is still required to provide an MPN notice. However, the new regulations have shortened the amount of information that must be in this initial notice and no longer require that it be distributed 30 days prior to implementing a new MPN. This “MPN Implementation Notice” directs employees to the general workers’ compensation and supplemental MPN posters;
  • A new, detailed MPN notice (“MPN Employee Notification”) must now include much of the information formerly required in the initial MPN notice with the addition of some new information including contact information for the MPN;
  • The MPN Employee Notification must now be posted next to the DWC 7 poster at all employer locations and only has to be provided in writing to employees at the time of injury or when an employee with an existing injury begins treatment under the MPN. It is not required for new hires;
  • All MPN notices and posters must be provided in Spanish only where there are Spanish speaking employees;
  • An employer may now distribute all MPN notices (NOT posters) electronically to all covered workers who have regular electronic access to email at work.

Consequences for failure to comply:

If an employer fails to provide required notice, an employee may be treated by his/her own personal physician for any injury during the period of non-compliance. Such an employer is also subject to a civil penalty of up to $7,000 for each violation and the tolling of the statute of limitations for filing claims.

For a detailed summary of all the changes including a list of what elements need to be in the required notices, see the DWC’s publication,
“Final Statement of Reasons and Updated Information Digest” or the actual
Regulations.

What should employers do?

Starting October 8, 2010:
ALL California employers must:

  • Update the current workers’ compensation pamphlets that they are distributing to all new hires. Many employers use the CWCI’s pamphlet entitled
    “Facts about Worker’s Compensation” to meet this requirement, while other employers get a pamphlet or a notice from their specific carrier. Check with your current carrier and make sure the pamphlets you are using going forward have been amended based upon the new regulations and are approved by the DWC;
  • Post the new “Notice to Employees-Injuries Caused by Work” poster (DWC 7)i
    ;
  • Provide the new, updated “Worker’s Compensation Claim Form and Notice of Potential Eligibility” (DWC 1)i to any injured workers (be sure to discard all copies of the old claim forms).

Employers who maintain an MPN must also:

  • Develop a new MPN Implementation Notice for use with new hires or if you are implementing an MPN for the first time. Your carrier may be able to provide these notices for you.
  • Update or redraft your current MPN notice so that it meets the new requirements of the MPN Employee Notification. While this new notice only needs to be given at the time of injury or when an employee with an existing injury begins treatment under the MPN, it would be wise to provide it to all current employees so that they are in possession of the most current information about your MPN and their rights. Again, check with your carrier for help.
  • Post a copy of the new MPN Employee Notification next to  your new DWC 7 Poster.

If you need help with any of the above, please contact your workers’ compensation broker, carrier, or third-party administrator or call Vantaggio for assistance at 949-248-0800.

VETS-100 Reporting Deadline September 30

The VETS-100 and VETS-100A Reports were due from certain contractors and subcontractors with current federal contracts on September 30, 2010 as the Department of Labor (DOL) has not extended the deadline this year as it had for 2009.

Background

Contractors and subcontractors with a current federal contract of $25,000 or more that was entered into before December 1, 2003 or a current federal contract of $100,000 or more that was modified or entered into on or after December 1, 2003 must generally file a VETS-100 by September 30 of each year. Contractors or subcontractors with either of the following must instead file the VETS-100A Report by the same date: a current federal contract in the amount of $100,000 or more that was entered into on or after December 1, 2003; a current federal contract as modified in the amount of $100,000 or more that was modified on or after December 1, 2003. Those contractors and subcontractors with a current federal contract of $25,000 or more that was entered into before December 1, 2003 (and not modified on or after that date) and a current federal contract in the amount of $100,000 or more that was entered into or modified on or after December 1, 2003 must submit both the VETS-100 and the VETS-100A Reports.

The VETS-100 Report relates the number of employees and new hires during the reporting period who are special disabled veterans; veterans of the Vietnam era; other protected veterans (veterans who served on active duty in the U.S. military during a war or in a campaign or expedition for which a campaign badge is awarded); and recently separated veterans (veterans within 12 months from discharge or release from active duty).

The VETS-100A Report relates the number of employees and new hires during the reporting period who are disabled veterans; other protected veterans (veterans who served on active duty in the U.S. military during a war or in a campaign or expedition for which a campaign badge is awarded); Armed Forces service medal veterans (veterans who, while serving on active duty in the Armed Forces, participated in a United States military operation for which an Armed Forces service medal was awarded pursuant to Executive Order 12985); and recently separated veterans (veterans within 36 months of discharge or release from active duty).

The other significant difference between the VETS-100 and VETS-100A Report forms is in the job categories.

These reports may be filed electronically via internet or by submitting a diskette. The reporting options and other information may be found at the Department of Labor’s website at https://vets100.vets.dol.gov/.

What employers need to do:

  • Determine if you are required to file
  • If required, file no later than September 30
  • If you have missed the deadline to file, we recommend getting professional advice on your particular situation
  • Call Vantaggio HR if you need assistance filing this report

Unemployment Benefits Extended, But Not COBRA Subsidy

On July 22, 2010, President Obama signed the
Unemployment Compensation Extension Act of 2010, that provides
additional federal unemployment benefits of 13 to 20 weeks, retroactive
to June 2, 2010, through November 30, 2010. This legislation restores
unemployment benefits to about 2.3 million Americans who had exhausted
their basic unemployment benefits through their respective states of up to
26 weeks. However, this legislation does not lengthen the current maximum
of up to 99 weeks for unemployment benefits.

This legislation affords about 510,000 Californians
who had experienced a disruption in unemployment extension benefits
with additional benefits for up to a total of 99 weeks. This legislation
extended the deadlines for filing for the federal extension from June 2, 2010
to November 30, 2010 for HI employees, but did not lengthen the maximum duration
of unemployment benefits from 47 weeks.

However, Congress has not expanded the COBRA subsidy which
affords Assistance Eligible Individuals (AEIs) the opportunity to pay only 35%
of their COBRA premiums for up to 15 months. While not impacting individuals
already receiving the subsidy, as things stand now, no one can become eligible
for the subsidy after May 31, 2010.

As you may know from our earlier emails,
this subsidy applied to employees and dependents whose COBRA
qualifying event was either the employee’s involuntary termination
that occurred between September 1, 2008 and May 31, 2010; or was the
employee’s reduction in hours between September 1, 2008 that was followed
by the employee’s involuntary termination between March 2, 2010 and May 31, 2010.
For additional information about the subsidy, please see our prior articles
COBRA
Subsidy Ends as of May 31, 2010
and
COBRA Subsidy and Unemployment Benefits Extended
by the CEA.

DOL, EEOC, and I-9 Audits on the Rise for Employers

“The government will hold accountable those employers who violate the law.” While this statement was made by a U.S. Attorney regarding its prosecution of employers for civil and criminal infractions, numerous federal agencies have significantly increased their investigations into, and prosecutions of employers in a variety of areas. With this current administration, it is clear that federal as well as state employment-related audits will be on the rise. Coupled with a high unemployment rate that historically trends towards employees filing more complaints and lawsuits, employers should be on heightened alert to get their employment practices into compliance as soon as possible.

The Department of Labor received increased funding through the American Recovery and Reinvestment Act enacted on February 17, 2009, which funded 50 full-time employees to enhance its enforcement efforts through its Wage and Hour Division (WHD).

The Department of Labor’s proposed 2011 budget, incorporated in the federal budget pending before Congress, includes 90 new full-time employees to address violations related to themisclassification of workers as independent contractors. In a joint initiative with the Treasury Department, these new employees would work to detect and deter misclassification of employees as independent contractors and to strengthen and coordinate federal and state efforts to enforce resulting labor violations, such as regardingfamily and medical leave, overtime, civil rights laws, unemployment insurance, Social Security, and Medicare. WHD would focus their efforts in the following industries: construction; janitorial; home healthcare; child care; transportation and warehousing; meat and poultry processing; and other professional and personnel service industries.

Another effort targets labor law enforcement in the construction industry; the WHD will emphasize prevailing wage enforcement and proper classification of workers. The Department of Labor is also concentrating its occupational safety and health standards enforcement efforts in the agricultural industry and in the agricultural and young worker populations. The WHD will increase enforcement to ensure compliance with applicable labor standards statutes, such asminimum and prevailing wages, overtime, and child labor provisions in the agricultural industry and among farm labor contractors in particular.

WHD will work to deter non-compliance among employers and will target repeat or persistent violators in all areas for which this agency has responsibility. The Department of Labor also seeks to better respond to Family and Medical Leave Act.

The Equal Employment Opportunity Commission (EEOC)

The EEOC enforces federal laws which prohibit an employer from discriminating against applicants and employees because that person is a member of a protected category under federal law, such as race, national origin, color, religion, sex, age, disability, and genetic information. The EEOC investigates and resolves discrimination complaints raised by individual employees or by the agency itself.

In the federal budget pending in Congress, the EEOC proposes another increase in its funding for 100 new investigators in fiscal year 2011 in order to reduce its backlog while simultaneously investigating, conciliating, and litigating new charges, such as allegedage discrimination and violations of equal pay. The EEOC will now focus on combating systemic discrimination, as opposed to individual cases of discrimination, to broadly impact an industry, profession, company, or geographic location. The EEOC will utilize recent legislation in these enforcement efforts, such as the Lilly Ledbetter Fair Pay Act of 2009 (discriminatory compensation decisions or other unlawful practices occur each time compensation is paid) and the 2008 Amendments to theAmericans with Disability Act or ADA (which more broadly construe “disability”). In regard to the latter, the EEOC expects to file more than 9,000 additional ADA charges in fiscal year 2011. The EEOC will also enforce Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA), which became effective on November 21, 2009, which prohibits public and private employers from collecting or disclosing such information. With increased funding, the Equal Employment Opportunity Commission would also further challenge employment practices such ashiring tests, credit checks, criminal background information, and medical tests that may adversely impact protected employees.

Wake-Up Call for Employers who Employ Unauthorized Workers

To further its goal in reducing demand for illegal workers and protecting job opportunities for the nation’s lawful workforce, the U.S. Attorney Office in San Diego, California recently filed a criminal action against The French Gourmet, Inc. The federal criminal action contends that this restaurant, bakery, and catering company allegedly engaged in an intentional pattern and practice of hiring unauthorized workers. The U.S. Attorney Office alleges 16 further violations by this employer, including the following felonies: conspiracy, eight counts of false attestation, and three counts of harboring illegal aliens against the president and manager of the company.

Here, the named and other managers arguably hired undocumented workers and falsely certified Employment Eligibility Verification Forms (I-9 Forms) under penalty of perjury. After receiving “no-match” letters from the Social Security Administration (stating that the Social Security Numbers provided by the employees did not match the associated names), the Company paid those named employees in cash rather than by paycheck until the employees produced new sets of employment documents with new social security numbers. The named manager and other unnamed individuals then signed new I-9 Forms for the employees, falsely certifying that their new documents, including new social security numbers, appeared to be genuine. The Company faces significant fines and penalties ($500,000 alone for harboring illegal aliens and another $500,000 for false attestation), as well as forfeiture of the proceeds gained from the unlawful activities and the facilitating (business) property. Their president and the named manager face a maximum of five years imprisonment per count, a $250,000 fine per count, and three years of supervised release.

What This Means for Employers

In Hawaii alone, seven new Department of Labor investigators were recently hired, including two in Maui, who will focus their investigations on the outer islands.

In California, the government is cracking down on employers with unauthorized workers.

Gone are the days when employers can afford to have less-than-perfect employment practices and policies. Employers should self-audit, seek expert guidance where needed, and resolve any violations. An employer could expend significant resources, including staff time and legal fees and expenses, to defend against a suit which may be brought by a current or former employee, or by a governmental agency.

If you need help from Vantaggio in getting into compliance, we have a number of products and services that can be of assistance, from full HR Audits to Leave Administration and COBRA kits to our monthly consultation hotline, relax™. Please let us help you before the government knocks at your door!

Hawaii Premium Plus Program

On May 18th, Governor Linda Lingle announced a new temporary program that is designed to stimulate Hawaii’s economy. As an incentive to hire unemployed individuals and create jobs, the Hawaii Premium Plus (HPP) program will reimburse employers up to $140 per month of the health insurance costs of each qualified new hire for up to 12 consecutive months. According to the state, this represents approximately one half of the cost to an employer to provide coverage to a single employee under Hawaii’s Prepaid Health Care Act.

A Qualified Employer must:

  • have 50 or fewer employees as of January 1, 2010 (although the plan may be later expanded to employers with more than 50 employees)
  • intend to employ the new employee for at least 32 hours per week for at least 24 consecutive months;
  • hire the eligible employee between May 1, 2010 and April 30, 2011, and
  • increase total number of employees compared to January 1, 2010.

A Qualified Employee

  • be at least 18 and legally reside in Hawaii;
  • have been unemployed for at least six consecutive weeks;
  • have received or exhausted unemployment insurance benefits immediately prior to being hired; and

In order to participate, an employer must take the following steps:

  • Submit a one-time Application to Enroll Employer and Employer Participation Agreement( Form HPP 8000-T
  • Submit a completed online Application to Enroll Employee (Form HPP 8000-U) for each qualified employee within two months of hire; and
  • Submit a completed online Quarterly Report (Form
    HPP 8000-V
    )
    by the fifteen of the month following
    each quarter.

HPP currently has an enrollment cap of 6,450 newly hired individuals. Once that threshold is met, the state intends to expand the program to employers with 50 or more employees. Once the enrollment cap has been met, the state’s unemployment rate will be reduced from 7 percent to 6 percent. The hopes are obviously that Hawaii employers will create new jobs as a result of this initiative and place previously unemployed individuals in those new positions.

Concerns for Employers

As this program is brand-new, employers have many questions. The state’s online materials have already been updated several times, so we expect that answers to some of these questions will become available over time. In the meantime, we urge our clients to consider the following:

  • Will this program really cause the creation of new jobs? As the reimbursement will only be available for qualified employees as described above, we wonder about how an employer will decide to create and recruit for a position without being certain in advance if the new hire will be eligible. Employers may want to consider directing their recruiting efforts towards unemployed individuals to maximize their chances of finding an eligible candidate. They can visit the Hawaii DLIR’s HIRENET Hawaii to post jobs and review resumes.
  • How should an employer handle the request for sensitive information? As the eligibility for HPP depends upon the employee’s family size and total household income, we urge our clients to exercise caution in asking these types of questions that could open the door to claims of discrimination. Our advice would be to only ask about HPP eligibility after the employee has been offered a position. While not required by the state, we would recommend obtaining the information in writing with a proper explanation to the employee of the reason for the request. The resulting information should not be used for any employment purpose other than the company seeking the reimbursement. For example, it would present risk to an employer who decides o terminate the employee or reduce his/her pay if he/she ended up not qualifying for the reimbursement. All related documentation should be kept separate from the employee’s regular personnel file.
  • What happens if the employee is terminated? The HPP regulations state that an employer must “intend” to hire the new employee for at least 24 months. However, if the employee leaves voluntarily, the state will not attempt to recoup funds already paid to the employer. Likewise, repayment will not be required if the employer terminates the employee due to lack of work related to the state’s economy or termination for cause. When an HPP participant is terminated, the employer will be required to send a termination notice via email to the state. They then also need to provide details including the date and reason for termination on the Quarterly Report.
  • How can an employer maintain their eligibility? The program clearly states that a company must increase its headcount by participation. We do not yet have any guidance about the enforcement of this requirement. For example, if several employees not participating in the HPP program resign resulting in a lower headcount from one quarter to another despite the creation of new jobs under HPP, would the employer lose eligibility? What happens if the employer total headcount decreases due to the closure of one of its locations?

For more information about HPP, please visit the state’s website which contains links to all of the required forms as well as a Q&A for employers: Hawaii Premium Plus.

Other Help for Employers

Employers should keep in mind that this is only one of the various forms of assistance available to help ease the financial burden of having employees. Please make sure you are familiar with the following:

  • HIRE Act– which provides tax benefits for employers who hire previously unemployed individuals including an exemption of the employer’s 6.2% share of the employee’s social security tax.
  • Health Care Reform– which provides tax credits of up to 35% of the cost of providing medical
    insurance for small employers who provide these benefits.
  • Hawaii’s Volunteer Internship Program– which allows employers to provide unpaid internships to certain previously unemployed individuals.
  • Hawaii’s SEE Hawaii Work Program– which presents employers with prescreened job applicants whose pay and benefits are subsidized by the state, including on-the-job guidance and mentoring, childcare coverage, health insurance coverage, transportation and housing assistance.

We are ready to answer any questions you may have regarding Hawaii Premium Plus, and to assist with any other Human Resource matter. Please give us a call.

Child Labor Regulations Updated by the DOL

The federal Department of Labor (DOL) published extensive revisions to child labor regulations on May 20, 2010. These new regulations, which go into effect on July 19, 2010, are designed to protect working children from workplace hazards while recognizing the value of safe work for children and their families. Some of these revisions are listed below.

Workers under 18 are prohibited from:

  • working at poultry-slaughtering and packaging plants;
  • riding on a forklift as a passenger;
  • working in forest-fire fighting, forestry services, and timber-tract management;
  • operating certain power-driven hoists and work-assist vehicles;
  • operating balers and compacters designed or used for non-paper productions; and
  • operating power-driven chain saws, wood chippers, reciprocating saws, and abrasive cutting discs.

In regards to 14- and 15-year-olds, these regulations:

  • allow employment in advertising, banking, and information technology;
  • clarify the work hours and time-of-day limitations, and define school hours as applied to non-agricultural employment;
  • prohibit youth-peddling activities or non-charitable door-to-door sales; and
  • establish a new work-study program for those who plan to attend college.

What should employers do?

We understand that the DOL intends to increase its audit efforts in this area. Due to the significant risk to minors that the DOL is attempting to avoid as well as the potential fines, penalties, and negative PR for employers, we urge our clients to examine their child labor policies and make any amendments as soon as possible. Please keep in mind that in addition to the above new federal guidelines, you also need to comply with any child labor restrictions imposed by your state which may include obtaining work permits prior to employing minors. For more information, see the California DLSE’s publication California Child Labor Laws and the Hawaii DLIR’s State of Hawaii Child Labor Law and Related Administrative Rules.

For further information on the new federal regulations, please see the Wage and Hour Division’s article entitled, “ Updating Child Labor Regulations for the 21st Century or call 1.866.4USWAGE (1.866.487.9243).

COBRA Subsidy Ends as of May 31, 2010

The COBRA subsidy, which affords Assistance Eligible Individuals (AEIs) the opportunity to pay only 35% of their COBRA premiums for up to 15 months, was not extended by Congress before its Memorial Day recess. For many employers, this came as quite a surprise. Up until late Friday night, it appeared that Congress was going to extend the subsidy for employees and dependents whose COBRA qualifying event took place through November 30, 2010. While not impacting individuals already receiving the subsidy, as things stand now, no one can become subsidy eligible after May 31, 2010.

As you may know from our earlier emails, this subsidy applied to employees and dependents whose COBRA qualifying event was either the employee’s involuntary termination that occurred between September 1, 2008 and May 31, 2010; or was the employee’s reduction in hours between September 1, 2008 that was followed by the employee’s involuntary termination between March 2, 2010 and May 31, 2010.

As this legislation has been subject to a number of extensions, most of which were retroactive in nature, we remain unsure of the subsidy’s future. We understand that Congress plans to reconsider extending the subsidy when it reconvenes on June 7, 2010. In the meantime, employers should continue to administer the subsidy for individuals who qualified prior to the May 31, 2010 sunset date. For individuals who terminated on or after June 1, 2010, COBRA notices should not contain language about the subsidy’s availability. If the subsidy is extended and made retroactive, those individuals will receive an updated COBRA notice.

If your company terminated an employee on June 1 with the anticipation of the subsidy still being in place, we urge you to give us a call. We have been in contact with the federal Department of Labor and can share the information we have learned from them.

For background about the subsidy, please see our previous article COBRA Subsidy and Unemployment Benefits Extended by the CEA

Hiring Incentives to Restore Employment (HIRE) Act

On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act, which provides 2 new tax benefits to certain employers who hire previously unemployed or under-employed workers.

A Qualified Employer is generally any private-sector taxable business or tax-exempt organization. While most government entities are excluded, public institutions of higher education are eligible for the benefits. Household employers are not.

Payroll Tax Exemption

The first tax benefit provides an exemption of theemployer’s 6.2% share of the Social Security tax on the employee’s wages paid between March 19 and December 31, 2010. Employers receive this benefit immediately, and the tax savings accrue with each payroll. There is no cap on this payroll tax exemption, which would represent a savings of about $2,800 for a $60,000 per-year worker hired on April 1, 2010 – obviously more for a more highly compensated employee. Keep in mind that the exemption only applies to the employer’s portion of the Social Security Tax (paid on annual wages up to $106,800). The employee’s 6.2% share of Social Security Tax and the employer and employee’s shares of Medicare tax still apply to all wages. This tax exemption will have no effect on the employee’s future Social Security benefits. For an employee who is also eligible for the Work Opportunity Tax Credit, the employer may only apply for one of the two.

New Hire Retention Credit

Volunteers & Interns under Hawaii Law

The Hawaii Department of Labor and Industrial Relations (DLIR) recently rolled out a Volunteer Internship Program (VIP) that was developed by Governor Lingle in an attempt to stimulate job growth in the state. In brief, the program allows individuals that are currently looking for a job, especially those receiving unemployment benefits, to obtain workforce training. However, as the area of workplace volunteers and interns is a complicated one for employers, we urge our clients to educate themselves about the rules. Inappropriately classifying someone as an unpaid volunteer or intern can carry significant liability.

Background

Both federal and state law provide minimum wage, overtime, and other protections to employees. The definitions of an “employee” are sometimes confusing. Typically, an “employee” is anyone who is “employed by an employer.” To “employ” someone is defined as “to engage, suffer, or permit to work.” What this means is that an employer can create an employment relationship not only by proactively requesting that the person perform services, but also by allowing the person to perform services that benefit the employer. It can be a gray area. To further complicate matters, just because an individual agrees to work without pay, does not necessarily exempt the employer from the liability to pay wages. Workers are not free to waive their legal rights to minimum wage or overtime.

What is a volunteer?

Hawaii takes its lead from the federal Fair Labor Standards Act (FLSA) in defining what constitutes a “volunteer.” In administering the FLSA, the federal Department of Labor (DOL) has maintained that in certain circumstances, an individual who intends to donate his/her time (usually on a part-time basis) purely gratuitously as a volunteer to a religious, charitable, or non-profit organization may be classified as a “volunteer” as long as the individual intends to volunteer his/her services for public service, religious, or humanitarian objectives, not as an employee, and without contemplation of pay. However, under the FLSA, a worker may not volunteer his/her services to a for-profit, private sector employer.

What about interns?

Too often, employers hire students and make the assumption that because they’re attending school and the job will provide for some level of instruction and training, the students can be unpaid interns. Unfortunately, in most cases, these employers are violating federal and state wage and hour laws, even if the students are happy to work for free.

Again, the legal definition of an unpaid intern is quite narrow. The DOL uses the following 6-factor test to determine if interns are exempt from minimum wage and overtime coverage:

1.  The training, even though it includes actual operation of the employer’s facilities, is similar to that which would be given in a vocational school;

2.  The training is for the benefit of the trainees or students;

3.  The trainees or students do not displace regular employees, but work under their close observation;

4.  The employer derives no immediate advantage from the activities of trainees or students, and on occasion the employer’s operations may be actually impeded;

5.  The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and

6.  The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

Please note that in applying and enforcing the above, the bar has been held quite high. Note criteria #3 above, which would mean that if you hire an ” intern” in lieu of an employee in a regular job, you will probably fail the test. Note that #4 requires that the employer derive no immediate benefit from the work being done by the interns and may even need to show that having the intern actually caused a disruption to business operations!

While there are formal internship and apprenticeship programs in Hawaii, employers need to be aware that the above factors will need to be respected in order for the internship to be legally unpaid.

What about workers’ compensation?

For purposes of workers’ compensation, anyone rendering services, regardless of being called an employee or an intern, is presumed to be an employee and eligible for workers’ compensation benefits. Additionally, unless the company can prove that the individual meets the narrow definition of “volunteer” described above, he/she will most likely be entitled to workers’ compensation benefits in the event of an injury.

What is Hawaii’s new Volunteer Internship Program?

This new program does in fact allow employers to hire interns without pay. The internships are limited to 16-32 hours per week for a minimum of 4, but no more than 8 weeks. Employers are not required to hire the intern upon successful completion of the program, but the hope of the program is that they will want to. Employers need to keep in mind that this is a formal program administered by the DLIR who will approve employers’ written requests to participate and will also pre-screen the interns. Please be aware that the DLIR still requires participating employers to design a training program that is in line with the DOL’s 6-factor test mentioned earlier in this article.

In order to be eligible, the employer must also meet the following criteria:

1. Is in good business standing with the State of Hawaii;

2. Is up-to-date on all state and federal taxes;

3. Is not in a high-risk industry or occupation such as window washers, explosives transporters, machine operators, construction workers, or hazardous materials workers;

4. Is in the private sector;

5. Is not requesting VIP internship slots in occupations with DLIR-recognized apprenticeship programs; AND

6. Is not requesting VIP internship slots that displace current workers or infringe on the promotion of regular workers.

To be eligible for the internships, the worker:

If currently receiving unemployment benefits, must not have exhausted his/her 26 weeks of benefits; OR

Must be seeking full-time work and must be registered in HireNet Hawaii.

NOTE: Under this program, the workers will not be considered employees. If injured, the intern will have the same medical coverage as state volunteers as described inHawaii Revised Statues 386-171. We suggest that you get clarification from the DLIR on this topic and discuss that matter with your workers’ compensation insurance carrier.

Interested employers should review the details of this program at the DLIR’s website:Hawaii’s VIP Program.

What should employers do?

In summary, we urge our clients to be very cautious in this area. Misclassifying a worker can create significant liability, which may subject a company to penalties, back pay, overtime, and unpaid employment taxes that can go back as far as 2 or 3 years.

If there is any doubt as to the validity of the worker truly being a volunteer or an intern, a safe approach would be to pay the person at least minimum wage, or perhaps even the sub-minimum apprenticeship wage that is permissible under federal and state law in very narrowly defined circumstances.

Audit all existing volunteers and interns that are currently providing services to your company in light of the DOL 6-factor test.

Correct any unpaid internships if necessary by placing the person on payroll and making good for back wages owed.

Analyze your hiring needs and submit a formal application to the DLIR if you want to pursue the VIP Program (Employer Application).

Do NOT assume that you can hire a student for the summer or hire someone who is currently receiving unemployment benefits and simply not pay the person.

As always Vantaggio is here to help you not only with compliance, but any of your HR needs. Please call us if you require help in establishing or administering an internship program.

Volunteers & Interns under California Law

On April 7, 2010, the California Department of Industrial Relations (DIR) Division of Labor Standards Enforcement (DLSE) issued an Opinion Letter, addressing the criteria used to determine whether a student intern or trainee who performs some work as part of an educational or vocational program is exempt from state wage and hour laws. This new opinion letter brings California’s criteria for classifying interns in line with federal standards.

Background

Both federal and state law provide minimum wage, overtime, and other protections (such as working conditions, meal and rest periods, call-in pay, etc.) to employees. The definitions of an “employee” are sometimes confusing. Typically, an “employee” is anyone who is “employed by an employer.” To “employ” someone is defined as “to engage, suffer, or permit to work.” What this means is that an employer can create an employment relationship not only by proactively requesting that the person perform services, but also by allowing the person to perform services that benefit the employer. It can be a gray area. To further complicate matters, just because an individual agrees to work without pay, does not necessarily exempt the employer from the liability to pay wages. Workers are not free to waive their legal rights to minimum wage or overtime.

What is a volunteer?

The definition of “volunteer” is very narrow. The DLSE has long taken the position (see their Opinion Letter 1988.10.27) that in certain circumstances, an individual who intends to donate his/her time purely gratuitously as a volunteer to a religious, charitable, or non-profit organization may be classified as a “volunteer” as long as the individual intends to volunteer his/her services for public service, religious, or humanitarian objectives, not as an employee, and without contemplation of pay. However, when religious, charitable, or non-profit organizations operate commercial enterprises available to the general public, such as thrift stores or restaurants, or when these organizations provide personal services to businesses, these individuals should be classified as employees and paid at least minimum wage and overtime, if applicable.

What about student interns?

Too often, employers hire students and make the assumption that because they’re attending school and the job will provide for some level of instruction and training, the students can be unpaid interns. Unfortunately, in most cases, these employers are violating federal and state wage and hour laws, even if the students are happy to work for free.

In the past, the DLSE used an 11-factor test to determine if trainees/interns were exempt from California minimum wage coverage in the absence of a state statute or regulation on the matter. The federal Department of Labor used a 6-factor test that was derived from a U.S. Supreme Court decision. With this most recent DLSE Opinion Letter, California will now align with the federal 6-factor test as follows:

1. The training, even though it includes actual operation of the employer’s facilities, is similar to that which would be given in a vocational school;

2. The training is for the benefit of the trainees or students;

3. The trainees or students do not displace regular employees, but work under their close observation;

4. The employer derives no immediate advantage from the activities of trainees or students, and on occasion the employer’s operations may be actually impeded;

5. The trainees or students are not necessarily entitled to a job at the conclusion of the training period; and

6. The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training.

Please note that this new 17-page Opinion Letter (DLSE Opinion Letter on Educational Internships) demonstrates that the DLSE did a detailed review of each and every factor described above, and analyzed all of the facts and circumstances of the particular program in question. The bar was held quite high. Note criteria #3 above, which would mean that if you hire a “student intern” in lieu of an employee in a regular job, you will probably fail the test. Note that #4 requires that the employer derive no immediate benefit from the work being done by the interns and may even need to show that having the intern actually caused a disruption to business operations!

While there do exist several formal programs within the state for student internship programs (Work Experience Education), employers need to be aware that the above factors will still need to be respected in order for the internship to be unpaid.

What about workers’ compensation?

For purposes of workers’ compensation, anyone rendering services, regardless of being called an employee or an intern, is presumed to be an employee and eligible for workers’ compensation benefits. Additionally, unless the company can prove that the individual meets the narrow definition of “volunteer” described above, he/she will most likely be entitled to workers’ compensation benefits in the event of an injury.

What should employers do?

In summary, we urge our clients to be very cautious in this area. Misclassifying a worker can create significant liability, which may subject a company to penalties, back pay, overtime, and unpaid employment taxes that can go back as far as 3 or 4 years.

If there is any doubt as to the validity of the worker truly being a volunteer or an intern, a safe approach would be to pay the person at least minimum wage, or perhaps even the sub-minimum apprenticeship wage that is permissible under state law in very narrowly defined circumstances.

  • Audit all volunteers and interns that are currently providing services to your company in light of the newly adopted 6-factor test.
  • Correct any unpaid internships if necessary by placing the person on payroll and making good for back wages owed.
  • Analyze your hiring needs and structure the recruitment and the job appropriately if you want to pursue a bona fide unpaid student internship which should be very carefully documented.
  • Do NOT assume that you can hire a student for the summer and simply not pay the person.

As always, Vantaggio is here to help you not only with compliance, but any of your HR needs. Please call us if you require help in establishing or administering an internship program.

Health Care Reform – What this Means for Hawaii Employers

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act into law. Congress approved changes to the brand new law under a separate piece of legislation entitled the Health Care and Education Reconciliation Act of 2010, which was itself signed by the President on March 30, 2010. Both new laws together represent the vehicle that President Obama’s administration will use to reform health care in the United States. After almost a full year of debate, there was still a great deal of discord over the exact provisions in the reform package. In fact, even though both pieces of legislation passed, the votes were close. The Patient Protection and Affordable Care Act was passed by a vote in Congress of 219 to 212; its counterpart by a vote of 220 to 207.

The problem now lies in figuring out what this all means. The Patient Protection and Affordable Care Act is 2,409 pages long; its counterpart is 2,310 pages. The laws overlap and intersect with each other. The provisions of both are complex and are phased in over time, with timelines that differ between the two pieces of legislation. Some aspects of the reform are not due to go into effect until 2018. At the current time, 13 state attorneys general have filed lawsuits claiming the reform package to be unconstitutional. This is going to be a long process that will probably change a great deal over time.

The problem is even more complicated for Hawaii. In 1974, Hawaii became the first and only state in the U.S. to implement an employer-mandated health insurance program. With few exceptions, most Hawaii employers are required to provide health insurance benefits to employees who work at least 20 hours a week on a continuing basis. The amount that employees can be asked to contribute to these plans is strictly enforced by the Hawaii Prepaid Health Care Act. The plan designs, the levels of coverage, and important provisions such as pre-existing conditions and total available benefits are also regulated by the statute.

After much debate, the new federal legislation does not exempt Hawaii, however, Hawaii’s Prepaid Health Care Act is specifically preserved by a provision within the reform package. The idea seems to be that since Hawaii is already on the forefront in the field of employer-provided health care, its plans would not be rolled back to align with the new national standards. However, as the national standards increase over time, Hawaii would move forward with any new standards.

Although not all will be applicable in Hawaii immediately, the following are key provisions of the federal reform package that we feel will be most meaningful for employers. For more details, please see these links on the U.S. Senate’s website: (The Patient Protection and Affordable Care Act-Immediate Benefits) and (The Patient Protection and Affordable Care Act-Implementation Timeline).

Due to take effect immediately:

  • Small-Business Tax Credits of up to 35% of premiums for health insurance paid by small employers who elect to offer coverage to their employees, provided that the average annual wages paid to their employees is below the established threshold.
  • No Pre-Existing Coverage Exclusions for Children will be allowed in employer and new individual plans beginning 6 months after enactment of the law.
  • Immediate Access to Insurance for Uninsured Individuals with a Pre-Existing Condition
  • Extension of Coverage for Young Adults who must be allowed to stay on family policies until reaching the age of 26. This provision will apply to all individual plans, new employer plans, and existing employer plans if the young adult is not eligible for employer coverage. This goes into effect 6 months after enactment of the law.
  • Coverage for Preventive Health Benefits must be provided in all new plans and exempts these benefits from deductibles starting 6 months after enactment of the law.
  • No Lifetime Limits on Coverage will be allowed 6 months after enactment of the law.
  • Protection from Plan Cancellation will be provided 6 months after enactment of the law and will stop insurers from rescinding insurance when valid claims are filed.
  • Prohibits Discrimination based on Salary for all new group health plans who will not be allowed to establish eligibility rules for health care coverage that favor higher-wage employees.

Due to take effect in 2011:

  • Standardized Definitions for Qualified Medical Expenses will be implemented such that qualified expenses under HSAs, FSAs, and HRAs will be the standardized.
  • Taxes for Non-Qualified Medical Expenses Withdrawals from HSA and MSA Accounts will increase from 10 to 20%.
  • Cafeteria Plan Changes will include the creation of a Simple Cafeteria Plan to ease administration for small employers.
  • Health Coverage Costs on W-2s must be reported for each employee starting with tax years beginning after December 31, 2010.

Due to take effect in 2013:

  • Limits Health FSA Account Contributions to $2,500 per year, indexed thereafter.
  • Medicaid Payroll Tax for “High Wage” Workers will be increased by 0.9% on wages over $200,000 for an individual and $250,000 for married couples, and an additional 3.8% tax on net investment income for the same group of taxpayers.

Due to take effect in 2014:

  • Elimination of Annual Limits in all health plans.
  • Establishment of Health Insurance Exchanges in each state to allow individuals and small groups to comparison shop plans and administer tax credits.
  • Individual Coverage Mandate will require most individuals in the U.S. to obtain “acceptable” health insurance coverage or pay a penalty. Lower-income individuals will receive a credit or voucher to help pay for their coverage.
  • Employer Penalties will be assessed in the amount of $2,000 per employee on companies with 50 or more employees who do not offer coverage to their employees.

Due to take effect in 2018:

  • Excise Tax on High-Cost Plans in the amount of 40% will be imposed on plans that are above the threshold of $10,200 for self-only coverage and $27,500 for family plans.

What should employers do?

Our best advice at the current time is for employers to avoid panicking. As mentioned above, it will be a long time before anyone truly understands all of the implications of these new laws, especially for Hawaii employers. However, we do recommend some immediate action items:

  • Make sure you have a competent broker – While historically not a common practice in Hawaii, we recommend that your company consider using the services of a professional benefits consulting and brokerage firm. As the complexity of the health care industry increases, employers who try to deal directly with their insurance carriers are increasingly at a disadvantage. Keep in mind that typically, there is no cost to your company to use the services of a broker, who is compensated through commissions from the carriers. In fact, a good broker can possibly save you money in helping find just the right coverage for your company, in managing your relationship with your carriers, and in easing your administrative burden. Call us for a recommendation if you do not have a broker, or are looking to make a change.
  • Audit your current plans – Many employers get “lazy” about their plan administration, allowing plans to be administered by their benefits department and rolling over from one year to the next. Either immediately, or at your next open enrollment period, have your broker assist you with a detailed review and analysis of your entire employee benefits package – medical, dental, life, disability, flex plans, 401(k), pension, etc. It is important to know exactly what you’re offering and what it’s costing.
  • Communicate with your employees – Recognize that this topic is being broadcast extensively in the media. Some people are scared, others are upset. Let your employees know that you’re staying on top of the developments, and ensure them that Hawaii’s Prepaid Health Care Act has been preserved. If you take any of the above steps with regards to analysis and planning, let your staff know that you’re doing so.
  • Talk to your Accountant – If you’re a small employer who could take advantage of the immediate tax credits, you’ll want to have your CPA confirm this for you. The timing and amount of these credits can help with the financial planning surrounding your current and future benefits packages.

As always, Vantaggio is here to help you not only with benefits, but any of your HR needs. Please call us if you require help with finding or changing brokers, handling your COBRA administration (Vantaggio HR’s COBRA Notice Kit), or in analyzing or administering any of your current benefit plans.

Health Care Reform – What this Means for California Employers

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act into law. Congress approved changes to the brand new law under a separate piece of legislation entitled the Health Care and Education Reconciliation Act of 2010, which was itself signed by the President on March 30, 2010. Both new laws together represent the vehicle that President Obama’s administration will use to reform health care in the United States. After almost a full year of debate, there was still a great deal of discord over the exact provisions in the reform package. In fact, even though both pieces of legislation passed, the votes were close. The Patient Protection and Affordable Care Act was passed by a vote in Congress of 219 to 212; its counterpart by a vote of 220 to 207.

The problem now lies in figuring out what this all means. The Patient Protection and Affordable Care Act is 2,409 pages long; its counterpart is 2,310 pages. The laws overlap and intersect with each other. The provisions of both are complex and are phased in over time, with timelines that differ between the two pieces of legislation. Some aspects of the reform are not due to go into effect until 2018. At the current time, 13 state attorneys general have filed lawsuits claiming the reform package to be unconstitutional. This is going to be a long process that will probably change a great deal over time.

The U.S. Senate has published a list of the provisions of the laws that take effect immediately (The Patient Protection and Affordable Care Act-Immediate Benefits) as well as a timeline that shows when other provisions are due to be implemented (The Patient Protection and Affordable Care Act-Implementation Timeline). The following are excerpts from these documents that we feel are most meaningful to employers:

Due to take effect immediately:

  • Small-Business Tax Credits of up to 35% of premiums for health insurance paid by small employers who elect to offer coverage to their employees, provided that the average annual wages paid to their employees is below the established threshold.
  • No Pre-Existing Coverage Exclusions for Children will be allowed in employer and new individual plans beginning 6 months after enactment of the law.
  • Immediate Access to Insurance for Uninsured Individuals with a Pre-Existing Condition
  • Extension of Coverage for Young Adults who must be allowed to stay on family policies until reaching the age of 26. This provision will apply to all individual plans, new employer plans, and existing employer plans if the young adult is not eligible for employer coverage. This goes into effect 6 months after enactment of the law.
  • Coverage for Preventive Health Benefits must be provided in all new plans and exempts these benefits from deductibles starting 6 months after enactment of the law.
  • No Lifetime Limits on Coverage will be allowed 6 months after enactment of the law.
  • Protection from Plan Cancellation will be provided 6 months after enactment of the law and will stop insurers from rescinding insurance when valid claims are filed.
  • Prohibits Discrimination based on Salary for all new group health plans who will not be allowed to establish eligibility rules for health care coverage that favor higher-wage employees.

Due to take effect in 2011:

  • Standardized Definitions for Qualified Medical Expenses will be implemented such that qualified expenses under HSAs, FSAs, and HRAs will be the standardized.
  • Taxes for Non-Qualified Medical Expenses Withdrawals from HSA and MSA Accounts will increase from 10 to 20%.
  • Cafeteria Plan Changes will include the creation of a Simple Cafeteria Plan to ease administration for small employers.
  • Health Coverage Costs on W-2s must be reported for each employee starting with tax years beginning after December 31, 2010.

Due to take effect in 2013:

  • Limits Health FSA Account Contributions to $2,500 per year, indexed thereafter.
  • Medicaid Payroll Tax for “High Wage” Workers will be increased by 0.9% on wages over $200,000 for an individual and $250,000 for married couples, and an additional 3.8% tax on net investment income for the same group of taxpayers.

Due to take effect in 2014:

  • Elimination of Annual Limits in all health plans.
  • Establishment of Health Insurance Exchanges in each state to allow individuals and small groups to comparison shop plans and administer tax credits.
  • Individual Coverage Mandate will require most individuals in the U.S. to obtain “acceptable” health insurance coverage or pay a penalty. Lower-income individuals will receive a credit or voucher to help pay for their coverage.
  • Employer Penalties will be assessed in the amount of $2,000 per employee on companies with 50 or more employees who do not offer coverage to their employees.

Due to take effect in 2018:

  • Excise Tax on High-Cost Plans in the amount of 40% will be imposed on plans that are above the threshold of $10,200 for self-only coverage and $27,500 for family plans.

What should employers do?
Our best advice at the current time is for employers to avoid panicking. As mentioned above, it will be a long time before anyone truly understands all of the implications of these new laws, and things may change as we all work our way through this process. However, we do recommend some immediate action items:

  • Make sure you have a competent broker – Now more than ever, companies need expert advice and guidance from a professional. Interview your current broker to make sure he/she is well versed in these and other (COBRA) changes in health care. Call Vantaggio for a recommendation if you do not have a broker or are looking to make a change.
  • Audit your current plans – Many employers get “lazy” about their plan administration, allowing plans to be administered by their benefits department and rolling over from one year to the next. Either immediately, or at your next open enrollment period, have your broker assist you with a detailed review and analysis of your entire employee benefits package – medical, dental, life, disability, flex plans, 401(k), pension, etc. Know exactly what you’re offering and what it’s costing.
  • Do benefit planning – With your broker’s assistance, identify any areas in your current plans that may need to change as a result of the upcoming provisions of the health care reform laws. Start a multi-year plan looking into how you may need to evolve your company’s benefit offerings. While we understand that the cost impact of this reform is still unknown, experts are predicting premium costs will likely increase.
  • Communicate with your employees – Recognize that this topic is being broadcast extensively in the media. Some people are scared, others are upset. Let your employees know that you’re staying on top of the developments. If you take any of the above steps with regards to analysis and planning, let your staff know that you’re doing so.
  • Talk to your Accountant – If you’re a small employer who could take advantage of the immediate tax credits, you’ll want to have your CPA confirm this for you. The timing and amount of these credits can help with the financial planning surrounding your current and future benefit packages.
  • If you don’t currently offer health benefits – If you’re either a large or small employer who does not currently offer benefits to all or some of your employees, now is the time to start planning. Tax credits can make doing so more affordable immediately for small employers. If you have over 50 employees, you should start planning for the penalty that will eventually kick in.

As always, Vantaggio is here to help you not only with benefits, but any of your HR needs. Please call us if you require help with finding or changing brokers, handling your COBRA administration (Vantaggio HR’s COBRA Notice Kit), or in analyzing or administering any of your current benefit plans.

COBRA Subsidy and Unemployment Benefits Extended by the TEA

On Tuesday, March 2, 2010, President Obama signed the Temporary Extension Act of 2010 (TEA) into law. After an initial review of this legislation, Vantaggio reported the following two important employment provisions: an extension and expansion of the ARRA COBRA subsidy and an extension of certain ARRA unemployment provisions – both of which were due to expire on December 31, 2009. The Department of Defense Appropriations Act of 2010 pushed out the date for these benefits to February 28, 2010. The TEA took things a step further and extended the subsidy to involuntary terminations that occur through

March 31, 2010 and the unemployment insurance provisions through April 5, 2010. However, after an in-depth review of the TEA, we have discovered that the impact on ARRA is more significant than first reported.

Background

As you may recall, ARRA created a federal subsidy for certain individuals losing their group health insurance who elected COBRA continuation coverage (see Vantaggio’s article
COBRA-Subsidy
Created by ARRA
. Assistance Eligible Individuals (AEIs) whose employment was terminated involuntarily between September 1, 2008 and December 31, 2009 could receive a subsidy in the amount of 65% of their COBRA premium for a period of 9 months. The Department of Defense Appropriations Act of 2010 included a provision extending this federal COBRA premium subsidy to involuntary terminations through February 28, 2010 and provided an additional 6 months of subsidy on top of the original 9 for a total of 15 months. Additionally, certain ARRA unemployment benefits that were due to begin phasing out by the end of 2009 were extended through the first two months of 2010.

New Subsidy Rules

Although not impacting the maximum period of subsidy eligibility (currently 15 months), the TEA makes an additional important change to COBRA. It expands the definition of AEIs to include an employee who lost his/her medical benefits as a result of a reduction in hours on or after September 1, 2008 and then experiences an involuntary termination between March 2 and March 31, 2010. The premium subsidy for these individuals would, however, only be available for any periods of coverage after March 2, 2010. Additionally, the maximum period of COBRA coverage would still be counted from when the coverage was originally lost due to the reduction in hours. For example, if an employee’s hours were reduced in early 2009 and the person elected COBRA at the time, he/she would not have been eligible for the subsidy due to the fact that there was no involuntary termination at the time. If the person is still on COBRA, he/she can now get the subsidy for periods of coverage following March 2, 2010. As most health insurance plans run on a calendar month basis, this would mean that this person could get the subsidy beginning with the month of April. If this same person had NOT elected COBRA in early 2009 when his/her hours were reduced (or if he/she did elect COBRA but then later discontinued the coverage), the TEA will now provide for a new election period allowing the person to get back on COBRA and to start claiming the subsidy. However, the maximum period of COBRA coverage will be measured back from the original date of loss of coverage due to the reduction in hours. The person will not be required to pay any retroactive COBRA premiums for periods during which he/she was not covered, and any periods of non-coverage will not count against the 63-day lapse in coverage rules for purposes of determining pre-existing condition exclusions according to HIPAA.

More Notice Requirements

The TEA requires that any individuals terminated on March 1 or March 2, 2010 who received COBRA notices that did not contain accurate subsidy information now be notified of the availability of the subsidies for terminations through March 31, 2010. Additionally, anyone who experiences an involuntary termination between March 2 and March 31 who previously lost coverage due to a reduction in hours on or after September 1, 2008, must be notified within 60 days of the termination of employment of the availability of the subsidy and his/her new election rights. It’s important to remember that some of these individuals will include employees who are not covered by the company’s health plan at the time of his/her termination.

What is an Involuntary Termination?

The TEA also provides some additional guidance to employers who have been faced with sometimes making a difficult judgment call about whether or not a particular situation would be considered an involuntary termination. What if the employer reduces an employee’s hours, and the employee resigns as a result? What if an employee elects to resign in lieu of being terminated? The TEA clarifies that if an employer makes a reasonable interpretation of ARRA (including its amendments and the guidance issued since), maintains supporting documentation (including a written attestation by the employer), then the termination will be considered an “involuntary termination.” This is not a free-pass for employers, as the DOL could still overturn an employer’s decision, but it should provide some level of comfort provided that the employer makes a good-faith, reasonable attempt to comply.

Other TEA Provisions

The TEA also adds specific penalties for employers and insurers who fail to follow a DOL determination following review of a subsidy denial. These penalties can include civil action and monetary penalties of up to $110 per day for failure to comply. The Act also provides clarification about the “transition period” which was a term first used in the DOD Act and refers to the period of time during which an individual’s original 9-month subsidy expired before the subsidy was increased to 15 months. The TEA clarifies that these individuals must make their COBRA payments by the latest of 60 days from the enactment of the DOD Act (December 19, 2009); 30 days after receipt of the notice required by the DOD Act; or the end of the otherwise applicable grace period.

We have been told that the act was named the “Temporary Extension Act” quite intentionally. It is meant to push the current benefits out for one more month, giving our federal legislature more time to consider several other bills that have been presented which propose to make more permanent changes to COBRA administration and the availability of a subsidy.

For a full review of the new law, see Temporary Extension Act of 2010. Details about the COBRA subsidy extension can be found in Section 3. For more information about the unemployment insurance provisions, see Temporary Extended Unemployment Compensation.

What should employers do?

As the new law takes effect immediately and is retroactive in nature, employers are encouraged to revisit the following:

  • Notify anyone who was an AEI at any time in March 2010 of this new provision (be especially cautious of anyone who experienced an involuntary termination on March 1 or March 2, 2010¹ prior to the signing of the TEA).
  • Notify anyone who lost coverage due to a reduction in hours after September 1, 2009 and who later experiences an involuntary termination between March 2 and March 31, 2010 of the new subsidy provisions and new election period.
  • Update ALL existing COBRA notices to include the new provisions:
    » General (Initial) Notice;
    » Election (Qualifying Event) Notice;
    » Summary of the COBRA Premium Reduction Provisions under ARRA;
    » Request for Treatment as an Assistance Eligible Employee.
  • Develop and send any newly required notices:
    » Notice of New Election Period
    » Supplemental Information Notice
    » Notice of Extended Election Period
  • Communicate with your insurance carrier and Third Party COBRA Administrator to be sure that all new notice requirements and special election opportunities are being met. REMEMBER – at the end of the day, regardless of who is doing the administration, the employer is responsible for and liable for COBRA compliance.
  • Provide training and guidance to your payroll and benefits administration employees.

Due to the costly fines and penalties that can be assessed and the significant liability for the employer in the event someone does not get the appropriate coverage, we urge our clients to take COBRA administration very seriously. You should review and update all COBRA procedures and documents on no less than an annual basis, or more frequently as the law changes.
If you do not have a third-party administrator (TPA) for COBRA, please contact Vantaggio for a recommendation. Although we believe that a competent TPA is the best course of action, for our clients who elect to keep this function in house, we have developed a self-administration kit. Please click here for more details: Vantaggio HR’s COBRA Notice Kit.

In the unlikely event that someone was involuntarily terminated on March 1 or 2, 2010, received COBRA information that did not reference that the subsidy would be available for AEIs through March 31, 2010, and subsequently declined coverage or elected and then declined coverage, he/she would need to be provided with the required information and a re-election opportunity. Most likely, as notice requirements are not typically sent out this quickly and since the vast majority of medical insurance plans run on a calendar month basis, not enough time would probably have transpired for individuals terminated on March 1 or 2, 2010 for all of the preceding steps to have occurred before the TEA was signed on March 2, 2010.

COBRA Subsidy Created by ARRA

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (ARRA) into law which brought significant changes to COBRA benefits and their administration. ARRA was then expanded and extended on December 19, 2009 by the Department of Defense Appropriations Act of 2010 (DOD Act), and again on March 2, 2010 by the Temporary Extension Act of 2010 (TEA). It has been a difficult task for employers to keep track of these ever-changing provisions, some of which have been implemented with retroactive implications and onerous and confusing notice requirements. In fact, more change in this area seems imminent, with additional legislation being considered at the current time.

As a reminder, federal COBRA applies to employers with 20 or more employees. Some states maintain COBRA-like plans that provide similar or additional benefits. These states would need to enact legislation to align with ARRA and any of its amendments.1

The New Federal Benefits

The following benefits are available to Assistance Eligible Individuals (AEIs):

  • A COBRA Premium Subsidy of 65% of the monthly cost of the individual’s COBRA coverage, for a period of up to 9 months under the initial ARRA legislation and then expanded to 15 months under the DOD Act;
  • Alternative Coverage – The ability of an employer to offer alternative coverage from what was in place at the time of the loss of coverage; and
  • Re-Election Rights – The ability to re-elect COBRA through an extended or special-election period for certain individuals who previously failed to elect COBRA or who elected COBRA and then subsequently declined the coverage. As many of the provisions of ARRA and its amendments had retroactive impact, there have been a number of special election periods during which individuals were afforded the opportunity to make a new decision about ARRA based on the terms and conditions of the subsidy offered at the time.

How the Subsidy Works

An AEI who elects COBRA or state COBRA-like coverage only needs to pay 35% of his/her full COBRA premium (individual AND dependent cost) in order to be deemed to have paid the full amount under ARRA as Amended. For federal COBRA – the premium reduction (65% of the full premium) is generally fronted by the former employer. For Cal-COBRA – the premium reduction is generally fronted by the insurance company. These entities are then reimbursed the 65% in the form of a payroll tax credit or direct reimbursement from the federal government.

Eligibility

The new COBRA benefits are available to Assistance Eligible Individuals (AEIs)2 who are defined as a former employee or qualified beneficiary (spouse or dependent) who meet all of the following criteria:

The employee was:

  • involuntarily terminated between September 1, 2008 and March 31, 20103 OR
  • lost coverage on or after September 1, 2008 due to a reduction in hours and then subsequently experienced an involuntary termination between March 2, 2010 and March 31, 2010; AND
  • Is eligible for COBRA continuation coverage or state COBRA-like coverage at some point during these dates; AND
  • Elects COBRA coverage or state COBRA-like coverage; AND
  • Is not eligible for Medicare or group health plan coverage (such as a plan sponsored by a successor employer or a spouse’s employer).

Notice Requirements for Employers

ARRA as Amended has created a number of new notice requirements for employers, both to inform AEIs of their benefits and any retroactive election periods, as well as to inform all individuals who experience a qualifying event of the current availability of COBRA subsidies. For a complete list of these notice requirements, please see Vantaggio’s Info Bulletin entitled “COBRA Notice Requirements.” Additionally, employers now have new responsibilities to provide information to their medical insurance providers. For example, if your company is going to allow for alternative coverage elections to AEIs, you must notify the insurance carrier. If you have employees who may need to be afforded a new opportunity to elect COBRA (other than at the time of a “normal” qualifying event), you should be sure to let your carrier know.

Due to the costly fines and penalties that can be assessed and the significant liability for the employer in the event someone does not get the appropriate coverage, we urge our clients to take COBRA administration very seriously. You should review and update all COBRA procedures and documents on no less than an annual basis, or more frequently as the law changes.

If you do not have a third-party administrator (TPA) for COBRA, please contact Vantaggio for a recommendation. Although we believe that a competent TPA is the best course of action, for our clients who elect to keep this function in house, we have developed a self-administration kit. Please click here for more details: Vantaggio HR’s COBRA Notice Kit.

1 Cal-COBRA exists in California and provides benefits very similar to federal COBRA but applies to companies with 2-19 employees. Hawaii currently has no state COBRA-like plan. While California did pass legislation in May 2009 aligning Cal-COBRA to the same notice requirements of ARRA, California has not yet passed legislation bringing the state’s notice requirements in line with the subsequent amendments to ARRA. However, legislation in pending in California that would do so.

2 Please note that the amount of the premium reduction is recaptured for certain high-income individuals. If the person’s adjusted gross income for the year is more than $125,000 (or $250,000 for married couples filing a joint federal income tax return) all or part of the premium reduction may be recaptured by an increase in his/her income tax liability for the year.

3 Currently December 31, 2009 for Cal-COBRA.

COBRA Subsidy and Unemployment Benefits Extended by the CEA

On Thursday, April 15, 2010, President Obama signed the Continuing Extension Act of 2010 (CEA) into law. This legislation addressed two important employment provisions: extension of the ARRA COBRA subsidy to involuntary terminations that occur throughMay 31, 2010 and an extension of certain ARRA unemployment provisions throughJune 2, 2010.

Background

As you may recall, ARRA created a federal subsidy for certain individuals losing their group health insurance who elected COBRA continuation coverage (see Vantaggio’s articleCOBRA Subsidy Created by ARRA). Assistance Eligible Individuals (AEIs) whose employment was terminated involuntarily between September 1, 2008 and December 31, 2009 could receive a subsidy in the amount of 65% of their COBRA premium for a period of 9 months. The Department of Defense Appropriations Act of 2010 (DOD Act) included a provision extending this federal COBRA premium subsidy to involuntary terminations through February 28, 2010 and provided an additional 6 months of subsidy on top of the original 9 for a total of 15 months. Additionally, certain ARRA unemployment benefits that were due to begin phasing out by the end of 2009 were extended through the first two months of 2010. The DOD Act pushed out the date for these benefits to February 28, 2010. The Temporary Extension Act (TEA) took things a step further and extended the subsidy to involuntary terminations that occurred through March 31, 2010 and the unemployment insurance provisions through April 5, 2010. The TEA also expanded the definition of AEIs to include an employee who lost his/her medical benefits as a result of a reduction in hours on or after September 1, 2008 and then experienced an involuntary termination between March 2 and March 31, 2010.

New Subsidy Rules

Although not impacting the maximum period of subsidy eligibility (still 15 months), the CEA extended the definition of AEIs to include involuntary terminations that occur through May 31, 2010 and to an employee who lost his/her medical benefits as a result of a reduction in hours on or after September 1, 2008 and then experiences an involuntary termination between March 2 and May 31, 2010. The premium subsidy for these individuals would, however, only be available for any periods of coverage after March 2, 2010. Additionally, the maximum period of COBRA coverage would still be counted from when the coverage was originally lost due to the reduction in hours. For example, if an employee’s hours were reduced in early 2009 and the person elected COBRA at the time, he/she would not have been eligible for the subsidy due to the fact that there was no involuntary termination at the time. If the person is still on COBRA and was terminated on April 2, he/she can now receive the subsidy for periods of coverage following April 2, 2010. As most health insurance plans run on a calendar-month basis, this would mean that this person could receive the subsidy beginning with the month of May. If this same person had NOT elected COBRA in early 2009 when his/her hours were reduced (or if he/she did elect COBRA but then later discontinued the coverage), the CEA will now provide for a new election period allowing the person to get back on COBRA and to start claiming the subsidy. However, the maximum period of COBRA coverage will be measured back from the original date of loss of coverage due to the reduction in hours. The person will not be required to pay any retroactive COBRA premiums for periods during which he/she was not covered, and any periods of non-coverage will not count against the 63-day lapse in coverage rules for purposes of determining pre-existing condition exclusions according to HIPAA.

California Employers Allowed to Deduct Vacation and Sick Leave in Hourly Increments

On November 23, 2009, the California Department of Industrial Relations (DIR) Division of Labor Standards Enforcement (DLSE) issued an opinion letter on the topic of an employer making deductions from an exempt employee’s vacation or sick leave balances. This new opinion letter affirms that employers may make such deductions in hourly increments for partial-day absences by an employee without jeopardizing the employee’s exempt status.

This is a significant change for California employers who, for many years, have had to wrestle with the fact that California wage and hour law differed significantly from federal law on this topic. To explain the background, exempt employees are not due overtime pay if they meet the salary test and the duties test of applicable federal or state law. At issue here is the salary test – in order to be classified as “exempt,” an employee must be paid on a salaried basis equal to the minimum thresholds established by federal and state law. In California, the salary must be twice California’s current minimum wage for the equivalent of full time work (currently $33,280 annualized). Under both federal and state law, if an employee works any portion of a week, the employee is due his/her full weekly salary. While there are some permissible deductions to the weekly salary, (see Vantaggio’s article Deductions from Exempt Employees’ Pay – Under California Law), an inappropriate deduction could result in the loss of the exempt status. Additionally, “docking” an exempt employee based on the quantity or quality of work performed can also result in the loss of the exemption.

Deducting money (sometimes referred to as “docking”) from an exempt employee’s pay and deducting time from the employee’s vacation or sick leave banks are two related, but very different issues that are oftentimes confused by employers.

Federal law generally allows for an exempt employee’s pay to be docked only in full-day increments if an employee absents him/herself for an entire work day due to personal reasons. Whether pay deductions are allowed when the employee is absent due to illness depends upon whether or not the employer maintains a bona fide sick leave plan that provides for a reasonable number of days off without loss of pay during absences due to illness. Without such a plan, employers are prohibited from docking an exempt employee’s pay even for full-day absences, provided that the employee performs some work during the workweek. If the employer does maintain a bona fide sick pay plan, an employer can make salary deductions for full-day absences due to illness if the employee is not yet eligible for or has exhausted his/her benefits under the sick leave plan. However, while pay deductions can normally only be done in full-day increments, federal law does allow for deductions from vacation and sick leave balances in hourly increments.

California has generally followed the federal guidelines for deductions from sick leave balances, but has historically treated vacation balance deductions differently. Previous case law has established vacation as wages in California (as opposed to being considered a benefit under federal law) which has led to the interpretation that a deduction from a vacation bank is equivalent to a deduction in wages. In 2002, California’s Labor Commissioner issued an opinion letter clearly stating that partial-day deductions from exempt employees’ vacation balances would jeopardize his/her exempt status. As a result, to be sure of compliance, many companies required exempt employees to use vacation benefits in full-day increments only. In June of 2005, the new Labor Commissioner withdrew the controversial 2002 letter and stated instead that employees could be allowed to use vacation in partial-day increments but left it unclear at to whether or not an employer could require them to do so.¹

Soon thereafter, in July of 2005, the California First District Court of Appeal rendered a decision in Conley v. Pacific Gas & Electric Co. [PG&E] stating that PG&E’s policy of charging its employees’ vacation bank for partial-day absences of 4 hours or more did not violate the salary test nor render these employees non-exempt. Again, while somewhat good news for employers and while moving closer to federal law, this case left California employers with questions. The court expressly stated that it did not intend to comment on partial-day absences of less than 4 hours. As such, many California employers, to play it safe, started allowing vacation balance deductions in 4-hour increments only. Likewise, in response to this case, the DLSE updated its enforcement manual to reflect that employers could make deductions from vacation or sick leave balances for partial-day absences of 4 hours or more.²

The November 23, 2009 DLSE opinion letter moves California into closer alignment with federal law³ on this subject. It specifically states and/or confirms the following:

  • VACATION, PTO, SICK LEAVE CAN BE USED IN HOURLY INCREMENTS:
    An employer may require that an exempt employee use available vacation, PTO, and sick leave in hourly increments for partial-day absences, even if the absence is less than 4 hours, as long as the practice is consistent with the employer’s policies.
  • PARTIAL-DAY ABSENCES:
    »An employer may not make deductions from an exempt employee’s pay for partial-day absences. Such salary deductions are only permissible if the exempt employee is absent for a full work day.»If an exempt employee’s vacation, PTO, or sick leave balances are insufficient to cover a partial-day absence, the employee must still be paid for the full day. For example, if an exempt employee works for 2 hours and only has 4 hours of paid leave available, the 4 hours may be deducted from the leave bank, but the employee would still need to be paid for the entire day.
  • FULL-DAY ABSENCES:
    » DUE TO ILLNESS: If an exempt employee’s sick (or PTO4) leave balance is insufficient to cover a full-day absence due to illness, the leave balance may be deducted, but the employee would still need to be paid his/her full compensation for the day. For example, if an exempt employee took 8 hours off due to illness but only had 3 hours of paid leave available, 3 hours could be deducted from the leave bank, but the employee would still need to be paid for the entire day. If the employee’s leave balance was 0, the employee would not be paid for a full-day absence due to illness.
    » FOR PERSONAL REASONS: If an exempt employee’s vacation or PTO balance is insufficient to cover a full-day absence taken for personal reasons, the vacation or PTO balance may be deducted, and the employee can be paid only for the amount of time that was available in the bank. For example, if an exempt employee took the whole day off for personal reasons but only had 4 hours of vacation or PTO available, the 4 hours could be deducted from the bank and the employee would not have to be paid for the remainder of the day.5

» COMBINING SICK AND VACATION: An employer may require that an exempt employee combine separate vacation and sick leave balances to cover either a full or partial-day absence. For example, if an exempt employee takes time off due to illness but has insufficient paid sick leave available, the employer can require that vacation time be used to cover the duration of the absence.

For more details and examples, please review the actual DLSE opinion letter DLSE Opinion Letter 2009.11.23.

What should employers do?

  • Review your current vacation, PTO, and sick policies for compliance with current federal and state law.
  • Decide if you would like to change your current policy with regards to the use of paid time off for exempt employees. Keep in mind that these new guidelines provide employers with more options and flexibility, but that having a policy where exempt employees can use paid time off in hourly increments also has its down sides. Remember that once those balances are exhausted, exempt employees will still need to be paid their full salary for partial-day absences. A new hourly usage policy may require additional monitoring by management, HR, and payroll.
  • Decide if you want to implement a policy that requires the use of vacation time if sick leave is exhausted.
  • Seek advice on any changes you wish to make and update your handbooks accordingly, giving proper notice to employees of these changes.

¹Please note that some exceptions exist which allow for hourly deductions such as for partial-day absences under an intermittent FMLA leave.

²The 4-hour rule only applied to sick leave plans that provided for a payout of unused time upon termination. If the sick leave plan did not provide for payout of unused time, the DLSE stated that employers could continue to make deductions from sick leave plans in hourly increments.

³It should be noted that the DLSE enforcement manual and opinion letters do not have the force of law and are not binding on courts in wage and hour cases. However, courts may find their arguments persuasive when rendering decisions. As such, they can be an important source of guidance for California employers but do not take the place of legal advice. We urge our clients to seek qualified counsel prior to implementing any major policy changes.

4As PTO plans generally provide paid leave benefits for absences due to both personal reasons and illness, we urge our clients to look at the reason for the absence, not the name of the benefit plan which may apply.

5Note the significant difference in treatment of full-day absences with insufficient leave balance between leaves taken for personal reasons and leaves taken for illness.

 

CHIPRA Notice Requirements for Employers

The CHIP Reauthorization Act of 2009 (CHIPRA) created a new notice requirement for employers who offer group health plans to their employees. The purpose of the notice is to let employees know that they may be eligible for assistance from their state in paying for health insurance premiums for their children. Regardless of the location of your company or where your health plan is insured, if you have employees who reside in a state that offers medical assistance under a state Medicaid or child health assistance plan, you must send this notice by the latter of the first day of the first plan year after February 4, 2010 or May 1, 2010. California, along with 39 other states, falls into this category.

The notice may be provided to employees along with the group health plan’s eligibility and enrollment information, open enrollment packets, or summary plan description; however, this must be a separate notice presented in a manner that ensures that employees will appreciate its significance. The Department of Labor has published a model notice (see “Employer CHIP Notice“), which employers may customize. Alternatively, employers with employees residing in more than one state may prefer to send the model notice, without customization, to all employees. Please note that this model notice will be updated annually.

Additionally, an employer must provide a “special enrollment” opportunity to enroll in the employer’s plan to those employees and dependents who: lost eligibility for coverage under a state Medicaid or CHIP program; or became eligible for State premium assistance under Medicaid or CHIP coverage. This special enrollment opportunity must be made available if the employee or dependent requested this coverage within 60 days of being terminated from Medicaid or CHIP coverage or within 60 days of being determined to be eligible for premium assistance. Further information is available at www.dol.gov/ebsa or, for California, www.cms.hhs.gov.

To learn if additional states have elected to offer this premium assistance since March 3, 2010 (when the model notice information was confirmed), please contact the U.S. Department of Labor’s Employee Benefits Security Administration at www.dol.gov/ebsa or 1-866-444-EBSA (3272); or the U.S. Department of Health and Human Services’ Centers for Medicare & Medicaid Services at www.cms.hhs.gov or 1-877-267-2323, Extension 61565.

Employers may be assessed $100 per day for failure to provide the requisite notice.

What should employers do?

  • Determine your company’s due date for providing this notice to your employees.
  • Based upon their state of residence, determine which of your employees must receive this notice.
  • Adopt the DOL model notice or customize one for use by your Company. For California employers, Vantaggio has created a sample notice that has been customized with information about the particular assistance programs within our state. Please contact us if you would like a copy of this notice.
  • Contact your medical insurance broker to ensure that your benefits plan has the appropriate procedures in place to handle the special enrollment requirements described above.

Parking Cash-Out Subsidy

Existing law requires certain California employers which provide subsidized parking for their employees to offer its employees a cash allowance in lieu of a parking space. As of January 1, 2010, employers subject to the Parking Cash-Out Subsidy employers may be assessed a civil penalty for violating this requirement.

Employers Subject to the Parking Cash-Out Subsidy

An employer who meets all the below criteria must offer a parking cash-out program:

  • The employer employs fifty or more employees (at one or more worksites);
  • The employer provides its employees with a partial or full parking subsidy;
  • The employer subsidizes any employee parking on property that the employer does not own;
  • The employer can calculate the out-of-pocket expense of the parking subsidies;
  • The employer can reduce, without penalty, the number of paid parking spaces it maintains for the use of employees (the parking costs are separated in the lease agreement and/or the employer claimed parking as a separate itemized business expense on state or federal tax returns); and
  • Any worksite is located in an air basin designated as a nonattainment area for any state air quality standard.

Nonattainment Areas

All of Southern California and much of Central and Northern California are currently designated as nonattainment areas regarding its air quality. Please see the Air Resources Board website at http://www.arb.ca.gov/homepage.htm to determine if any worksite is located in an air basin designated as a nonattainment area.

Employee Eligibility and the Amount of the Subsidy

An employee who uses or could use a subsidized parking space (whether assigned or unassigned) must be offered the cash-out allowance.

Employees who are current carpoolers, vanpoolers, transit users, telecommuters, walkers, or bikers are eligible for the parking cash-out if a qualifying subsidized parking space for a single-occupancy vehicle is currently available to him/her. Please note that carpool and vanpool spaces are not subject to the cash-out.

The cash allowance is equivalent to the parking subsidy that the employer would otherwise pay to provide the employee with a parking space. The parking subsidy is the difference between the out-of-pocket amount paid by the employer and the charge, if any, to an employee for use of that space. So, if an employer pays $100 per month to provide an employee with a parking space and charges an employee $20 per month for that parking space, the subsidy would be $80. An employee’s eligibility changes with his/her parking circumstances. For instance, if an employee changes worksites and goes from a subsidized leased parking space to one that is not eligible (e.g., a space owned by the employer), the employer is no longer required to offer the employee a cash allowance.

An employer which reimburses its employees for commute-related parking costs must offer this subsidy if the parking costs are reimbursed on a regular basis. Commute-related subsidies (e.g., transit passes, ridesharing allowances) may be deducted from the cost of the parking in determining the amount of the cash allowance. For instance, if the employee does not use the parking space, which costs $65 per month, and receives a $50 transit pass (subsidy) each month, the cash allowance is $15 per month.

Additionally, an employer which has worksites with different leased parking rates may average the cost per space. The cash allowance would change over time based to reflect the average cost of subsidized parking.

Tax Implications

This cash allowance is considered taxable income to the employees, meaning it is included in the employee’s gross income subject to state income and payroll taxes (except for any portion used for ridesharing purposes). Ridesharing subsidies are exempt from state income taxes and some transit or vanpool subsidies are exempt from federal income taxes. The employer may deduct the costs related to this cash-out program as a business expense.

Guidelines

The employer may establish reasonable policies for administering this benefits, such as quarterly or semi-annual review, enabling an eligible employees to switch between the subsidized parking or cash out.

An employer subject to the Parking Cash-Out program may require its employee participants to certify that they will comply with guidelines established by the employer designed to avoid neighborhood parking problems, with a provision that an employee who does not comply with the guidelines will no longer be eligible for the parking cash-out program.

Penalties

Effective January 1, 2010, an employer could be assessed a civil penalty for failure to adhere to these requirements by the State Air Resources Board, not to exceed $500 per vehicle in a parking space subject to the cash-out program. Alternatively, the city, county, or air district could impose a civil penalty.

To Do

  • 1. Determine which employee parking is subject to the cash-out;
  • 2. Determine which employees are eligible for the program;
  • 3. Calculate the appropriate cash allowance for each eligible employee;
  • 4. Inform eligible employees; and
  • 5. Administer the program

Additional Considerations

Most bargaining agreements will require employers to meet and confer with the union regarding cash-out implementation.

An employer may discontinue parking subsidies, which may have the same impact on reducing solo driving as providing a cash allowance. Some employers may slightly decrease the parking subsidy to help defray the costs of the parking cash-out program.

An employer may implement the parking cash-out program as a commute benefits program, providing all employees with a choice as to how to use the commute subsidy.

Two employees may carpool and cash-out one parking space or use alternate commute modes to share the use or a parking space.

For Additional Information

For additional information on the Parking Cash-Out Program, please visit the following web pages or call Dennis Wade at 916-327-2963.

http://www.arb.ca.gov/planning/tsaq/cashout/cashout_guide_0809.pdf

http://www.arb.ca.gov/planning/tsaq/cashout/cashout.htm

Deductions from Exempt Employees’ Pay – Under California Law

Generally, both federal and state law provide that an exempt employee must be paid his/her full salary for any workweek in which he/she performs any work, regardless of the number of days or hours worked, subject to limited exceptions. California employers are cautioned to pay particular attention to this topic, as the state exceptions are narrower than the federal. The importance of this issue should not be underestimated since an employer who makes inappropriate deductions from an exempt employee’s wages may cause that employee and possibly the entire category of employees to lose their exempt status and then become eligible for overtime pay. Additionally, back overtime, taxes, fines, penalties, attorneys’ fees, and the risk of lawsuits can pose significant hardship for the employer.

The following summarizes the current rules to be followed in California:

Quantity or Quality of Work: An employer owes an exempt employee his/her full weekly salary regardless of the quantity or quantity of work performed that week.

Business Closures, Unavailability of Work: If a business shuts down for less than a full week (even for a holiday), all exempt employees must receive their full salary. The same would apply if the employer does not have work available for the employee. Non-exempt employees, on the other hand, may be paid only for the time actually worked.

Safety Violations or Disciplinary Action: California employers may not make deductions from exempt employees’ wages as penalties for safety violations and/or for disciplinary reasons.

Arriving Late, Leaving Early: Penalties or deductions from an exempt employee’s salary for late arrivals or for leaving early are not allowed.

Jury Duty, Appearing as a Witness, Military Leave: Unless the employee is absent for an entire week, deductions may not be made from an exempt employee’s salary for these reasons.

Initial/Final Week of Work: Employers may make full-day deductions from an exempt employee’s regular salary for partial weeks worked during his/her first and last week of work.

Worker’s Comp Leave: An employer is allowed to make full-day deductions from an exempt employee’s pay on a workers’ compensation leave, provided that the employee is receiving compensation from a workers’ comp policy or a self-insured plan. Additionally, to take these deductions, the employer must maintain a plan that provides for compensation for non-work-related injuries or accidents.

Sickness or Accident: Generally, no deduction may be made from an exempt employee’s salary for absences caused by sickness or accident unless the absence exceeds a full week. However, if the employer has a bona fide sickness or disability plan (i.e., a plan which provides a reasonable number of days off without loss of compensation for absences due to illness – which could be either a sick leave or a PTO plan) and the employee has exhausted his/her allowance under the plan or is not yet eligible under the plan, then the employer may make salary deductions for full days of work missed. An employer is free to deduct time from an exempt employee’s leave balance in hourly increments as long as it does so in accordance with its own policies. If the employee does not have sufficient paid leave available but takes a full or partial day off due to illness, the employee’s leave balance can be deducted but he/she must still be paid his/her full compensation for that day.

An employer is permitted to establish a policy that requires an employee to use available vacation time if there is insufficient sick leave to cover an absence.

Vacations or Personal Time Off: California employers may make pay deductions from exempt employees who take a full day of work off for personal reasons (including to respect a religious holiday) even if the employer does not maintain a bona fide vacation plan. If the employer does maintain a bona fide vacation or PTO plan, the employer is free to deduct time from an exempt employee’s leave balance in hourly increments as long as it does so in accordance with its own policies. If the employee does not have sufficient vacation or PTO available but takes a full day off for personal reasons (not illness), the employee’s leave balance can be deducted and the employee can be paid only for the amount of time that was available in the bank. If the employee does not have sufficient vacation or PTO available and takes a partial day off for personal reasons, the employee’s leave balance can be deducted, but the employee must still be paid for the full day of work.

Additionally, employers should be cautious about exempt employees performing work such as checking voicemail and email during a vacation as this can potentially turn a full day off into a partial day off. In order to maintain a full day off despite the de minimus work, employers need to communicate clearly to employees that they are not expected or required to perform work during absences.

Family/Medical Leave: An exempt employee who takes time off from work on an intermittent basis under FMLA or CFRA may have his/her salary, vacation, PTO, or sick balance reduced in hourly increments without risking his/her exemption.

Pregnancy Leave: California Pregnancy Disability Leave laws do not make it clear whether or not an exempt employee taking intermittent leave under PDL may have partial-day salary deductions. As such, we recommend that unless the leave is also covered by FMLA, deductions only be taken in full-
day increments.

Supplemental Payments? Under California law, an employer is permitted to pay exempt employees above and beyond their regular weekly salary (bonuses, additional pay for “overtime” hours worked, etc.) without risking their exempt status.

Do you need help? If your company does not have written policies or job descriptions, you should seriously consider implementing them. If you already have these documents, make sure to review them for compliance on an annual basis. If you need more information about employee handbooks, which employees should and should not be exempt, specific deductions on one of your employees, wage orders, overtime regulations, sick leave plans, vacation/PTO benefits, or any other subject discussed in this article, please contact your labor attorney, HR consultant, or the federal and state agency websites.

Salary Deductions for Exempt Employees – New Rules or Old Rules?

On May 30, 2001, the California Labor Commissioner announced some significant changes to state wage and hour regulations. Detailed in an opinion letter from the Labor Commissioner’s legal counsel, the changes would have affected how California employers must pay exempt employees (see insert for information about what an exempt employee is) and in what circumstances deductions are permitted from exempt employees’ wages. In brief, the new interpretation would have required that an exempt employee be paid his/her full salary for any month n which he/she performs any work, regardless of the number of days or hours worked, subject to very limited exceptions for vacations and sick leave.

After supposedly receiving a barrage of phone calls, emails, and letters, the Labor Commissioner withdrew the opinion letter on June 22, 2001, stating that the Industrial Welfare Commission would be reviewing this new “monthly salary test” on June 29, 2001. However, when the IWC

the employer has a bona fide sickness or disability plan that pays full compensation during an absence and the employee has exhausted his/her allowance under the plan or is not yet eligible under the plan, then the employer may make deductions for full days of work missed.

Jury Duty, Appearing as a Witness, Military Leave: Unless the employee is absent for an entire week, deductions may not be made from an exempt employee’s salary.

Vacations or Personal Time Off: California employers may make deductions from exempt employees’ pay who take a full day of work off for personal reasons. An exempt employee who works a partial day must be paid for the full day. Whether or not you can deduct partial days of vacation from an exempt employee’s vacation balance is currently a bit unclear under CA law. Employers should seek legal guidance when developing or modifying a vacation policy.

Do you need help? If your company does not have written policies, you should seriously consider implementing a company policy manual or employee handbooks, especially if the monthly salary test ends up being implemented. If you have a manual in place, a thorough review will be imperative once the new

convened on June 29th, only two of its members were present. They were unable to proceed without a quorum. After several more meetings and hearing extensive testimony, the IWC finally voted to amend Wage Order 5 to add language clearly stating that California will continue to follow federal Fair Labor Standards Act (FLSA) rules when determining allowable deductions for exempt employees. Additionally, the IWC voted to conduct hearings to explore the option of amending all the other wage orders.

The federal rules require an exempt employee be paid his/her full salary for any week in which he/she performs any work, regardless of the number of days or hours worked, subject to similar limited exceptions for vacations and sick leave. However, all California employers are cautioned to keep informed about any possible new developments. The importance of this issue should not be underestimated since an employer who makes inappropriate deductions from regulations are clarified. If you need more information about employee handbooks, which employees should and should not be exempt, specific deductions on one of your employees, wage orders, overtime regulations, sick leave plans, vacation benefits, or any other subject discussed in this article, please contact your labor attorney, HR consultant, or the federal and state agency websites.

What is an Exempt Employee?

Don’t make the same mistake as Farmers’ Insurance

In a record-breaking class action lawsuit, Farmers Insurance was recently hit with a $90 million judgment for having misclassified many of its workers as “exempt” employees and not having paid them overtime.

To clarify an often-confusing term, “exempt” employees are those who are not subject to the overtime pay provisions of state and federal law. Many employers believe that simply calling an employee a “manager” or putting the person “on salary” makes them exempt from overtime pay.

However, Federal and California law describe very specific types of duties that can an exempt employee’s wages will cause the employee to lose his/her exempt status and then become eligible for overtime pay.

The following summarizes the current rules to be followed in California:

Business Closures: If a business shuts down for less than a full week, all exempt employees must receive their full salary. Non-exempt employees may be paid only for the time actually worked.

Safety Violations: California employers may not make deductions from exempt employees’ wages as penalties for safety violations.

Arriving Late, Leaving Early: Penalties or deductions from an exempt employee’s salary for late arrivals or for leaving early are not allowed.

Sickness or Accident: No deduction may be made from an exempt employee’s salary for absences caused by sickness or accident unless the absence exceeds a full week. However, if qualify a person as an
“executive,” “administrative,” or “professional” exempt employee. Don’t make the mistake of assuming that you now what these terms mean – the definitions are in many cases not what you would expect, and very little is left to the discretion of the employer.

For example, an exempt professional employee is usually only someone who is licensed or certified by the state and who practices in one of the specific areas that the law lists. Accountants (other than CPA’s) are not exempt professionals, despite the fact that most of us would refer to them as professional people.

In order to be exempt under California law, the employee needs to spend at least 50% of his/her time engaged in duties that meet the state’s definition of exempt work. In addition, the employee must be paid a monthly salary equivalent to no less than two times the state minimum wage for full time (40 ours per week) employment. California’s current minimum wage is $6.75 hour, meaning that an exempt employee needs to make at least $2340 per month. Should minimum wage increase, so will the salary requirement for an exempt employee.

DLSE Issues Opinion Letter Regarding Reductions in Salary

The Division of Labor Standards Enforcement (DLSE), the California agency which enforces state wage and hour laws, recently issued an Opinion Letter regarding reductions in salary for exempt employees. DLSE opined that an employer, which was experiencing ongoing financial difficulties after conducting layoffs and contemplated further layoffs, could temporarily reduce the work schedule of its exempt employees (from 5 to 4 work days or by 20%) with a proportionate decrease in salary without affecting their exempt status as long as all other applicable requirements (such as the monthly salary amount) are met. There, the employer intended to fully restore the workweek and salaries as soon as business conditions allowed.

An employer needs to be sure that employees are properly classified as exempt and non-exempt. Here, the exemptions described in Section 3 of applicable Wage Order 4-2001 relate to the executive, administrative, and professional exemptions. In addition to meeting one of these three exemptions, an exempt employee must meet the Salary Basis Test, earning a monthly salary of at least twice the state minimum wage for full-time employment (defined as 40 hours per week). Pursuant to federal regulations, an exempt employee must receive a predetermined amount of compensation each pay period (on a weekly or less frequent basis) which is not subject to reduction because of variations in the quality or quantity of work performed. Additionally, an exempt employee must receive the full salary for any week in which he/she performs any work without regard to the number of days or hours worked, but may not be paid for any workweek in which he/she performs no work.

Employers which are considering reductions in pay and similar cost-saving measures should be sure to comply with all applicable laws to prevent against potential claims.

What employers need to do:

  • Fully consider all cost-saving measures
  • Implement any changes pursuant to applicable law
  • Contact Vantaggio HR before implementing any scheduling changes for exempt employees

For additional information, please see the DLSE Opinion Letter at:
http://www.dir.ca.gov/dlse/opinions/2009-08-19.pdf.

Federal Contractors Now Required to Utilize E-Verify

E-Verify (formerly called the Basic Pilot/Employment Eligibility Verification Program) is an online system that is operated by the Department of Homeland Security and the Social Security Administration. This program allows employers to verify a new hire’s eligibility to work in the U.S. by verifying information from his/her I-9 Form against data in a composite national database.

This program is currently voluntary for most employers may NOT be used to verify employment on current employees. For companies not required to utilize it, careful thought should be given before enrolling in the program. While use of the system is free, employers must take the internal steps to implement certain procedures including posters, notices, authorization forms, and adverse action protocols. Additionally, employers who are not willing to make the necessary changes that may be needed based upon information received back from E-Verify should not voluntarily enroll in the program. Likewise, automatically terminating an employee on whom mis-match information is received from E-Verify is illegal and can subject the employer to fines, penalties, and claims of discrimination.

However, the rules have recently changed for federal contractors. Beginning September 8, 2009, federal contractors with federal contracts in excess of $100,000 and with performance terms which exceed 120 days and federal subcontractors with federal subcontracts in excess of $3,000 MUST use the E-Verify system to verify that NEW and CURRENT employees are authorized to work in the U.S.

These employers must enroll in E-Verify within 30 days of the contract award date (and in other instances, such as contracts involving indefinite delivery or quantity of projects modified after September 8, 2009 and contracts which will not be completed until March 8, 2010 or later).

These employers must initiate E-Verify for existing employees who will be working on the contract and all new hires within 90 days of enrolling in E-Verify. After the 90-day phase-in, the employer must initiate E-Verify for all new hires within 3 business days of their start dates.

The employer must continue using E-Verify for the duration of the contract for all new hires whether or not they are assigned to the contract, unless certain exceptions apply. (Exceptions apply to institutions of higher learning, state and local governments, governments of federally recognized Native American tribes, and for sureties performing under a takeover agreement with a federal agency.)

An “employee assigned to a federal contract” is an employee hired after November 6, 1986, who is directly performing work in the U.S. under a contract that includes the clause committing the contractor to use E-Verify. An employee is not considered to be directly performing work under the contract if the employee normally performs support work, such as indirect or overhead functions and does not perform any substantial duties under the contract.

What employers need to do:

  • Determine if you are required to utilize E-Verify
  • If required, enroll in and use E-Verify as directed
  • If not required, seek advice on voluntary participation before making a decision
  • Update policies and procedures related to verifying an employee/candidate’s work authorization
  • Call Vantaggio HR if you need assistance in determining whether or not to use E-Verify and/or in updating or drafting related policies and procedures

For additional information, please review the U.S.C.I.S. website at http://www.uscis.gov/.

California Employer May be Liable for Employee’s Car Accident while Returning from Out-of-Town Conference

A California appellate court held that an employee’s attendance at a business conference, including the commute to and from the conference, constitutes a special errand under the special errand doctrine, which renders an employer vicariously liable for accidents caused by an employee engaged in a special errand for the employer.

Under the “Going and Coming Rule,” an employee is not considered acting within the scope of employment while going to or coming from the workplace as the employee is not ordinarily rendering services to the employer while traveling. An exception to this rule occurs when an employee is engaged in a “special errand” or a “special mission” for the employer. In such instances, the employee is considered to be in the scope of employment for the entire trip and the employer is legally responsible for the employee’s actions while traveling to accomplish the special errand. Thus, an employee’s attendance at an out-of-town business conference authorized and paid for by the employer may be a special errand for the benefit of the employer under the special errand doctrine, which could include commercial travel.

What employers need to do:

  • Ensure that employees who regularly drive on Company business have a valid driver’s license, a clean driving record, and appropriate insurance
  • Contact Vantaggio HR regarding conducting DMV record checks and/or updating Business Travel policies

To review this case, please visit http://www.courtinfo.ca.gov/opinions/documents/B212323.PDF.

Disparate Treatment Discrimination – Don’t Get Caught By Surprise

The New Haven, Connecticut fire department made it a practice of administering civil service tests for all applicants into captain or lieutenant positions. The examination resulted in higher scores for white applicants than for minority applicants. Fearing a lawsuit based on disparate impact discrimination (an employment practice which appears neutral but has an unintended and unjustified adverse impact on a certain class of employees) the department decided not to implement or “certify” the exam results because none of the African American firefighters who took the exam had scored high enough to be considered for promotion. Ironically, a group of white and Hispanic firefighters who had scored well sued over a violation of their rights under Title VII, claiming that the city discriminated against them based on their race for not certifying the test results which would have led to their promotion.

The case made its way to the U.S. Supreme Court which held that an employer may not decline to certify results of an exam that would result in disproportionately more white applicants becoming eligible for promotion than minority applicants solely because it feared that certification of the results would lead to charges of racial discrimination.

In this case, the employer considered promotion qualifications and relevant experience in neutral ways. The employer also carefully ensured broad racial participation in the design and implementation of the test. Additionally, the process was open and fair. Related hearings produced no strong evidence of unlawful action by the employer. The employer was found to have participated in disparate treatment (intentionally discriminating against a certain class of protected employees) and was therefore not entitled to disregard the tests based solely on the racial disparity in the results.

What employers need to do:

  • Ensure that examinations and all other employment practices are job-related, consistent with business necessity, neutral, valid, and have less disparate impact than an available alternative employment practice
  • Understand the difficult interplay between disparate impact and disparate treatment discrimination
  • Seek appropriate advice and guidance with all employment policies that present some risk for claims of discrimination – even those that seem fair on the surface
  • Particularly in times of economic hardship, perform a adverse impact study before any reduction in force, downsizing, or other adverse action that will impact a group of employees
  • Contact Vantaggio HR to assist in verifying consistency legality of employment practices

To review this case, please visit: http://www.supremecourtus.gov/opinions/08pdf/07-1428.pdf.

Department of Labor and Industrial Relations Prepares Hawaii Business for Higher Unemployment Tax in 2010

As of January 2009, the Unemployment Insurance (UI) trust in Hawaii has been paying out approximately $31.7 million dollars of benefits EACH MONTH. The Department of Labor and Industrial Relations (DLIR) is anticipating that the UI trust will be depleted as of the 4th quarter in 2010. Current law provides for unemployment taxes to increase automatically whenever the UI trust falls below a certain level. In 2009, Hawaii employers were using Tax Schedule A and paying an average of 0.7% UI tax on a base wage of $13,000. In 2010, Hawaii will be moving to Tax Schedule F or G and the average rates will range from 2.75% and 3.3% on a new base of $37,900. These two changes will mean that some employers may actually be paying as much as three times more UI tax on a single employee. For more details, read the full news release: http://hawaii.gov/labor/news/2009/sep/MR2009_22_UITax.pdf

What employers need to do:

  • Factor in this substantial increase in UI tax when doing your planning for 2010
  • Update your employee fringe benefits load factor with this new amount so that you know the true fully-loaded cost of your employees
  • Diligently monitor your unemployment claims. Do not be complacent about challenging claims that you feel are not fair. Monitor your company’s experience rating
  • Contact Vantaggio HR if you need help in managing your UI claims

Hawaii’s New Card Check Law

Despite already being the second most unionized state in the nation (behind New York), Hawaii lawmakers in July overrode Governor Lingle’s veto of the state’s new “Card Check” legislation. While similar to the national Employee Free Choice Act (EFCA) whose future remains controversial and uncertain, this new Hawaii law impacts far fewer employers than would EFCA. Hawaii businesses with revenues in excess of $5 million per year whose employees are not covered by the National Labor Relations Act (primarily agricultural employers*) are subject to Hawaii House Bill 952 which amends the Hawaii Employment Relations Act (HERA).

Up until the passage of this law, the unionization process has consisted of a secret-ballot election where employees had the opportunity to vote for or against the union effort in a process that has been federally supervised. Under “Card Check”, the state’s Labor Relations Board is able to certify the results of a representation election simply based on having a majority count of signed authorization cards. A private ballot election is prohibited, even if the workers want one. Additionally, after the union is certified, the employer must begin the bargaining process within 10 days. If no agreement is reached after 90 days, either side can request conciliation. If another 20 days go by without an agreement, an arbitrator is assigned whose decision is binding for 2 years. The law brings with it fines of up for $10,000 per unfair labor practice.

For details about HB 952, click here: http://www.capitol.hawaii.gov/session2009/Bills/HB952_CD1_.HTM

* In addition to agricultural employees, other employees are not subject to the NLRA – for a complete list, click here:
http://www.nlrb.gov/workplace_rights/employees_or_employers_not_covered_by_nlra.aspx

What employers need to do:

  • Verify if your company and/or your employees fall under the protection of the NLRA or not
  • Keep an open dialogue with employees and make efforts to address their needs and concerns
  • If a “Card Check” process is commenced, obtain guidance from a management labor law attorney

New Genetic Information Poster Required

The Genetic Information Nondiscrimination Act of 2008 went into effect on January 1, 2009 and applies to all private employers with 15 or more employees as well as all public employers. The major provisions of this law included that:

  • Employers cannot use genetic information when making hiring, firing, job placement, or promotion decisions;and
  • Health plans cannot deny coverage or charge more based on genetic predisposition.

Effective November 21, 2009, covered employers are required to include new GINA language in the EEOC posters. Their “Equal Employment Opportunity is the Law” poster has been updated and can be found HERE.

For employers who already have the EEOC poster, a GINA Supplement can be downloaded and posted.

Vantaggio’s all-in-one federal and state posters are in the process of being updated. We advise our clients to use the links above while waiting for the full release of 2010 employment posters. Remember, if you are a current client on our relax® program, you receive one set of posters each year at no cost, but please email us at tmorin@vantaggiohr.com to get on the waiting list.

FMLA Military Leaves Updated

In January 2008, Congress amended the FMLA by providing two new types of qualifying leaves, both related to military service:

Exigency Leave – which provides up to 12 weeks of leave for an employee to provide support to a spouse, son, daughter, or parent who is a member of the National Guard and/or Reserves who has been called to active duty or who has been notified on an impending call to active duty.

Caregiver Leave – which provides up to 26 weeks of leave for an employee to provide care for a spouse, son, daughter, parent, or “next of kin” who is a member of the U.S. Armed Forces (both active duty as well as National Guard and Reserves) with a serious injury or illness incurred while on active military duty.

Effective immediately, the 2010 National Defense Authorization Act expands these military leaves in the following manner:

  • Exigency Leave is now also available to an employee with an eligible family member who is an active duty service member in regular military service (no longer just members of the National Guard or Reserves) and who is deployed to a foreign country.
  • Caregiver Leave is now also available to an employee with an eligible family member who is a veteran receiving medical treatment, recuperating, or undergoing therapy within five years of incurring the serious injury or illness while they were on active military duty.

As a reminder, FMLA applies to all employers with 50 or more employees. Covered employers should be aware that the new FMLA regulations detail extensive posting and notice requirements. Please contact Vantaggio if you need help getting in compliance with this ever-changing and complicated topic.

For details about the 2010 National Defense Authorization Act, click here:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h2647enr.txt.pdf

What does this mean for employers?

  • Update your employee handbook immediately to include information on the new service member leave provisions.
  • Update your employment law poster just as soon as the new FMLA language becomes available in poster form. Click here for information about Vantaggio’s all-in-one federal and state poster sets. Remember, if you are a current client on our relax™ program, you receive one set of posters each year at no cost, but please email us at tmorin@vantaggiohr.com to get on the waiting list for 2010 posters.
  • Update your FMLA notices and medical certifications. We hope the DOL will update its current model notices and medical certification forms as a result of this new legislation. However, be advised that the current model notices do not include information on the expansion provisions described above. If you currently use the Vantaggio federal and state Leave Administration Kit, this next release will be ready by November 15. We will be contacting you with details. For anyone NOT yet using Vantaggio’s Leave Administration Kit, we urge you now, more than ever, to consider purchasing it. Please click here for details.
  • Train your front-line managers who need to be able to pick up on information from employees that may trigger even a potential need for FMLA leave and the ensuing requirement for the employer to begin the notice and documentation process. Remember that employees do not need to specifically request FMLA in order to be eligible.

 

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