Federal and State News – New Wind Business Solutions

AB5 will make it hard to use 1099 workers

October 31, 2019Eric Lorenzen

California employers need to need to inform themselves about the changes coming their way due to the passage of AB5. This attack on gig workers could have huge consequences on your business if you hire anyone as an independent contractor. Some consultants are going so far as to tell their clients to stop using any independent contractors or freelancers whatsoever. The concern is the possibility of a lawsuit claiming that those “independent contractors” should have been employees and that you now owe back pay and penalties for not providing them with minimum wages, required health benefits, lunch breaks, and so on.

Basically, the law will impose the ABC test on all independent contractors to determine whether they should be an employee of yours or not. For someone to truly by a freelancer they must meet these three criteria: (A) the worker is free from your company’s control (B) the worker performs work that isn’t central to your company’s business and (C) the worker has an independent business, trade or occupation in that industry. If you can’t prove that ALL THREE ARE TRUE, then that freelancer should have been hired as an employee, even if it’s just as a temporary employee.

In a recent article in Forbes magazine, Heidi Lynne Kurter noted that the law sponsored by State Representative Lorena Gonzalez will put a huge burden on those who actually want to be independent:

Gonzalez’ intentions might be good, but the stark reality is hundreds of thousands of independent contractors in California will become employees under the bill. Everyone from manicurists, dancers, journalists, writers, bartenders and delivery drivers will be impacted. Business Insider estimated around 7,200 workers have lost their media jobs this year alone. As media faces major challenges in business, this number will only continue to climb as publications lack the means to bring on more employees.

Read the full article from Forbes magazine.

According to The Hollywood Reporter, the new law is causing headaches for many freelancers, especially among writers. Companies around the country are already avoiding any California-based freelancers:

Many publications that employ California freelancers aren’t based in the state and it’s not clear how AB 5 will affect them. Still, some are choosing to opt out entirely. Indeed, several freelance writers who spoke to THR say that various out-of-state employers — some with offices in California — have already told them they’re cutting ties with California freelancers.

Read the full article at The Hollywood Reporter.

How does this affect your business? You will need to think carefully before hiring any independent contractor to do anything around your company. Many will now avoid individuals (and people doing business under FBNs), and keep their outside hiring strictly to hiring other companies, since the law doesn’t affect and business-to-business transactions. Thankfully, New Wind Business Solutions is a California corporation so our clients needn’t worry about hiring us. However, this does limit our ability to hire independent specialists to help with certain types of projects.

Required Sick and Safety Leave in San Antonio, Texas

October 30, 2019October 29, 2019Eric Lorenzen

Following in the footsteps of many other large cities, San Antonio is implementing its mandatory Sick and Safe Leave (SSL) ordinance on all employers in the city. Employees earn 1 hour of sick leave per every 30 hours worked, up to a maximum of 56 hours of paid leave per year. The city ordinance is still being fine-tuned (see the last revision from September 2019 here), but it will be established by the end of the year.

When does the law start? December 1, 2019 is now the start date, but that has been delayed a few times already.

Who does this law apply to? All employers in San Antonio, no matter how big or small their business. This applies to all employees who work within city limits. If your employee also works outside the city but still works at least 240 hours a year in San Antonio, then the law still applies.

For what purpose can an employee take SSL? An employee can use accrued sick leave when they need to be absent from work because the employee or the employee’s family member suffer illness, injury, stalking, domestic abuse, sexual assault, or otherwise require medical or health care, including preventative care and mental health care. According to the law firm Ogletree Deakins PC, the law defines who classifies as a family member:

The revised ordinance includes a more specific definition of a “family member,” which now includes (i) “[s]pouses, domestic partners, and both different-sex and same-sex significant others”; (ii) “[a]ny other family member within the second degree of consanguinity or affinity”; and (iii) “[a] member of the covered employee’s household,” as well as “[a] minor’s parents, regardless of the sex or gender of either parent.” In addition, “[t]he concept of parenthood is to be liberally construed without limitation as encompassing legal parents, foster parents, same-sex parent, step-parents, those serving in loco parentis, and other persons operating in caretaker roles.”

Read the full article, including a nice summation of the law, at website of Ogletree Deakins.

Does an employer have to pay out accrued sick leave upon termination? No, according to the latest revision, “This ordinance does not require the payment of sick and safe leave upon separation from employment and it does not require that sick and safe leave be calculated as an increase to salary or wages for an employee.”

What kind of record keeping is required? The employer will need to provide monthly updates to each employee, letting them know how much SSL has been accrued. If you have an employee handbook, the SSL policy must be stated. There might be some required posters, but that is still to be determined.

Need to update your Texas Employee Handbook? If so, then contact us today and get a customized employee handbook that includes required and recommended policies for your business.

Lactation Accommodation Rule Changes

October 21, 2019October 19, 2019Eric Lorenzen

Women who are expressing milk while at work will be getting a longer list of accommodations starting in 2020. In California, employers are already required to allow women to express milk as needed during their work day, but those regulations are now being clarified and the “lactation location” is being more defined with the passage of SB142:

Place should be private so that milk can be expressed without intrusion
Should not be a bathroom
Running water and a sink should be available to the employee
Has a surface (such as a counter or table) where lactation equipment can be placed
Within a close proximity of the employee’s work area
Provides electricity for plugging in/ charging of equipment
Provides nearby refrigeration for expressed milk

California’s Department of Industrial Relations offers further guidance of the current law:

1. Q. Does an employer have to provide an employee with additional break time to express breast milk?

A. Yes, an employer must provide additional break time to employees who need it.

2. Q. Does an employer have to pay for the additional time to express breast milk?

A. No. While the employer must allow an employee to leave the work area to pump, the employer does not have to pay for pumping time, beyond the standard break time.

3. Q. Can my employer demand a doctor’s note or other medical documentation?

A. No. Your employer cannot require you to submit any documentation regarding your need to express breast milk.

4. Q. Does my employer have to provide me with a place to express breast milk?

A. Yes, your employer must make a reasonable effort to provide you with the use of a room or other location other than a bathroom and in close proximity to your work area. This may include the place where the employee normally works if it otherwise meets the requirements.

To continue reading, please visit dir.ca.gov. Please note, the rules will get more detailed in 2020. This government site is talking only about current rules as of October 2019.

An article by the law firm of Fisher Phillips provides a nice summation of the law’s regs for providing a “lactation room”, which includes the following:

…

Second, the new law provides that a lactation room must:

Be safe, clean, and free of hazardous materials, as defined;

Contain a surface to place a breast pump and personal items;

Contain a place to sit; and

Have access to electricity or alternative devices, including, but not limited to, extension cords or charging stations…

…

Fourth, the new law provides that, where a multipurpose room is used for lactation among other uses, the use of the room for lactation shall take precedence over the other uses, but only for the time it is being used for lactation purposes.

Want to read more? Visit FisherPhillips.com

There are some exceptions for certain employer hardships and for employers with less than fifty employees, but it doesn’t alleviate from all of these regulations.

All of this raises the question of whether you have your employee policies set in writing to prevent any confusion about your company’s rules and procedures. Are you a California business or ministry looking for an employee handbook? If so, learn more about Custom Employee Handbooks.

(This article provides an overview of certain federal, state, or local laws. It is not intended to be, and should not be construed as, legal advice by New Wind. We do not provide any legal advice, financial advice, or tax advice. Please see an appropriate professional for such services.)

Changes to Tip Rules

October 19, 2019October 19, 2019Eric Lorenzen

Who gets paid tips and who doesn’t? Can you force an employee to share tips? Can a supervisor take a share of tips? Well, the rules for tips are being revised (and hopefully simplified).

PLEASE NOTE: These changes in Federal regulations are not yet finalized, so there may be some changes to them. However, any restaurant or hospitality manager should be aware of what’s coming because it affects how tips are distributed and how tipped staff are paid.

According to law firm Littler, Mendelson P.C.,

Over a year after Congress amended the Fair Labor Standards Act (FLSA) to clarify tip ownership questions, the U.S. Department of Labor (DOL) finally published a Notice of Proposed Rulemaking on October 8, 2019… The proposed regulatory changes address two key areas. First,… clarified who can, and who cannot, receive tips when a tipped worker does not receive a tip credit. Second, the proposed regulations adopt the DOL’s 2018 opinion letter that outlined the proper scope of the dual jobs regulation and the so-called 80/20 Rule involving work done by employees receiving a tip credit.

Want to read more? Visit Littler.com

The regulations will reinforce that tip pooling requirements are okay, but cannot include supervisors or business owners. The law firm FordHarrison states, “If the proposed rule is finalized, employers who do not take a tip credit will be permitted to include “back-of-the-house” employees who usually do not receive tips (such as cooks and dishwashers) as part of a tip pool. Lastly, the existing rule prohibiting employers from keeping employees’ tips or participating in tip-pooling arrangements will remain.” Who qualifies as an owner or supervisor is also clarified, defining a supervisor as one who meets federal guidelines for salaried “exempt” classification.

The part of this tip rule change that is getting the most attention is the 80/20 rule, which could become very complicated for employers to track. Basically, you had to prove that your tipped staff spent less that 20% of their day working on duties that weren’t tip generating (like cleaning, prepping settings, etc.). As explained by the law firm Jackson Lewis P.C.,

The 20% Rule… requires employers to pay tipped employees the full minimum wage, rather than the lower cash wage applicable to tipped employees, if an employee spends more than 20% of his or her time performing allegedly non-tipped duties (which were undefined).

Want to read more? Visit JacksonLewis.com

The proposed changes will allow for side work done while also doing tip-based work, such as prepping sides or cleaning or polishing utensils. According to Ogletree Deakins,

The proposed rules also modify the frequently litigated 80/20 rule related to side work performed by service employees. The proposed rule explains that an employer may take a tip credit for any amount of time that a tipped employee performs work related to non-tipped duties contemporaneously with his or her tipped work, or for a reasonable time immediately before or after performing the tipped duties.

Want to read more? Visit Ogletree.com

All of this raises the question of whether you have your employee policies set in writing to prevent any confusion about your restaurant’s rules and procedures. Are you a California hospitality business looking for an employee handbook? If so, learn more about Custom Employee Handbooks.

News Link: Targeted Help Wanted Ads Can Get You in Trouble

October 8, 2019Eric Lorenzen

One of the key features of advertising on sites like Facebook is the ability to target your ads to a particular demographic. You can aim at millennials or city-dwellers or those who like dogs. The ability to get that granular in your ads can often greatly improve your click-through rate and, more importantly, your sales rate.

Unfortunately, some rather big companies have recently been busted by the Equal Employment Opportunity Commission (EEOC) for targeting their Help Wanted ads at particular demographics. As reported by Xpert HR:

The EEOC said that the following companies posted job ads excluding older workers:

Capital One;

Enterprise Holdings;

Edward Jones; and

Drive Time Auto.

The agency also found that three other companies excluded women and older workers from viewing job ads:

Nebraska Furniture Mart;

Renewal by Andersen; and

Sandhills Publishing Company.

Want to read more? Link to the rest at Xpert HR.

Why are these ads wrong? Well, this is a new version of the old newspaper ads that declared things like, “Looking for a strong young man to work in warehouse” or “Due to travel requirement, applicants should be unmarried” or even more offensive Want Ads that declared minorities shouldn’t even bother applying.

Instead of spelling out their apparent bigotry, the companies were making sure their Want Ads weren’t even seen by undesirable job-hunters. They may not have meant to discriminate, but the EEOC states that is exactly what they were guilty of doing. By their ad-targeting, they were seeking out only a particular type of job applicant (young, male, etc.) and were excluding all others who might have been interested in working for them.

News Link: Employer Credit for Paid Family and Medical Leave

October 7, 2019October 7, 2019Eric Lorenzen

Here’s a bit of government news that could benefit some business owners. You might be able get a tax credit for the FMLA benefits you give your employees. Of course, there are numerous restrictions and requirements, like that the employee must have been with you at least 1 year, they can’t earn above a certain amount, and you must be offering a certain minimum amount of paid time off.

According to the IRS,

“Internal Revenue Code Section 45S provides a tax credit for employers who provide paid family and medical leave to their employees. Eligible employers may claim the credit, which is equal to a percentage of wages they pay to qualifying employees while they’re on family and medical leave.”

The article is done in a Q and A format, and is rather lengthy.

Want to read more? Link to the rest at the IRS Newsroom.