The following was prepared by CPE HR, and the original article can be found at their site HERE.
On October 9, 2011, California Governor Jerry Brown signed almost two dozen new California human resources and labor-related bills into law, effective in 2012. Below we highlight seven of the most important laws. As these these laws directly impact employers in the state of California it is highly recommended you familiarize yourself with them, or contact CPEhr to assist you.
SB-459: Worker Misclassification Act. SB-459 is designed to crack down on the misclassification of employees as independent contractors.
AB-887: The Gender Nondiscrimination Act. This law amends California’s existing anti-discrimination laws as detailed in the Fair Employment and Housing Act. It defines both “gender identity” and “gender expression” as their own protected classes.
AB-469: Notice of Pay Details requires California employers to provide all non-exempt hires with a written notice that contains additional employment information, including rate of pay, paydays, and additional employer information.
AB-22: Prohibition on Use of Credit Reports in Employment. This new legislation prohibits employers from using an employee’s credit history in making most employment decisions. This also applies to applicants interviewing for a job. The new bill significantly limits the occasions for which an employer may use a credit report.
Assembly Bill No. 592: Interference with California Family Rights Act Leave makes it an unlawful employment practice for any employer to interfere with or otherwise prevent or attempt to prevent an employee from exercising rights under the California Family Rights Act.
Senate Bill No. 757 Domestic Partner Discrimination in Health Insurance. SB 757 is federal legislation that forbids employers from willfully excluding from coverage eligibility discriminating in coverage between spouses or domestic partners of a different sex and those in same-sex marriages or domestic partnerships.
Senate Bill No. 299 – Pregnancy Disability Leave. This new law requires all employers with 5 or more employees to continue health coverage for eligible female employees who take Pregnancy Disability Leave, up to 4 months in a 12-month period.
2012 Workers’ Classification Strategies
As briefly outlined above, California Senate Bill 459, affectionately known as the “The Job Killer Act,” imposes severe penalties on employers who “willfully” misclassify workers as independent contractors. On the Federal level, worker misclassification has been the focus of attention by the Department of Labor. Labor Secretary Hilda Solis, recently stated, “The misclassification of employees as independent contractors is an alarming trend. The practice is a serious threat to both workers, who are entitled to good, safe jobs, and to employers who obey the law and are undercut when others use illegal practices.”
The Labor Department is now sharing information regarding businesses that misclassify workers with the IRS. As part of their efforts, the DOL has hired approximately 300 investigators to explore wage theft complaints. The IRS has already collected almost $4 million of back wages in 2010, during the first of its three-year plan to audit some 6000 randomly selected, various sized companies.
Employers who misclassify employees may face significant penalties, in addition to employment taxes and benefits. As such, it behooves all employers to review their employee job descriptions and reclassifying misclassified workers if necessary. A few tips:
- Read through the Labor Department’s rules and examine workers’ job descriptions to determine whether classifications are correct.
- Investigate complaints immediately. A worker claiming that they are entitled to a particular status or financial benefit should be heeded and employers should be sure to examine the case.
- Review the IRS guidelines. The IRS provides clear eligibility parameters for determining independent contractor status. One must consider all information that helps determine the degree of control and independence maintained by the worker in relation to the company.
In short, to prevent future aggravation and financial penalties, be proactive, investigate complaints promptly, carefully check each worker’s status and reclassify as necessary. Alternatively, contact CPEhr who can assist you in all aspects of employee job descriptions and classifications.
Reducing California Workers’ Compensation Costs in 2012
After years of stable workers’ compensation insurance rates, California employers can expect to see a significant increase in their insurance premiums starting January 2012. On November 4, 2011, Insurance Commissioner Dave Jones approved an average increase of 37% to the pure premium rates and a claims cost benchmark of $2.30 per $100.
The best way to offset increase in premiums is to maintain a safe work environment, which will reduce the occurrence of workplace injuries, and ultimately lead to a reduction in the company’s experience modification rate (Ex Mod).
Below are four fundamentals practices that will directly impact your workplace safety:
1. Implement an Injury and Illness Prevention Program (IIPP)
Not only is an IIPP a necessity for regulatory compliance*, but a well designed IIPP will also help to minimize injuries and related costs. An IIPP should address key items including responsibility for overseeing the safety program, communication with employees, employee compliance with the program, hazard (risk) assessment and correction, accident investigation, safety training and recordkeeping.
*All California employers are required by Cal/OSHA to have an Injury and Illness Prevention Program in place. Federal OSHA is currently considering a similar requirement.
2. Make Safety Everyone’s Job
While it is necessary to designate specific individuals to administer the IIPP, it is also important to emphasize the company-wide shared responsibility for safety. In order for an IIPP to be effective, everyone from top management to supervisors and employees must buy in to and support the program. Make sure that managers and supervisors are adequately trained regarding company safety policies so that they can help to enforce these policies with their employees.
3. Consider a Safety Incentive Program
When done right, an incentive program can be a valuable addition to the company’s overall safety program. Be wary of programs that discourage injury reporting; instead, try implementing a program that uses positive reinforcement, rewarding employees for contributing to workplace safety by making safety suggestions, following safe work practices and assisting with hazard identification efforts.
4. Consider Outsourcing Safety Administration
Many organizations attempt to institute an effective, cost efficient Risk Management Program in an effort to reduce workplace injuries. These programs may be difficult to implement, often with unproductive and costly results. Consider contracting with a Human Resources Outsourcing firm that employs safety specialists to assist you in the creation and implementation of an effective safety plan. Contact CPEhr’s Risk Management Department for more information.
2012 Tax and FICA Information
Once again, various tax and payroll limits will be changing in 2012. Below is a summary of the important changes. Payroll/tax figures which remain the same in 2012 are noted as such.
FICA (Social Security)
Maximum Taxable Earnings – $110,100
Employer/Employee 2012 Withholding Percent – 6.2%
Employer/Employee 2012 Maximum Withholding – $6,826.20
($4,485.20 in 2011 for EE)
($6,621.60 in 2011 for ER)
Maximum Taxable Earnings – No Limit
Employer/Employee 2012 Withholding Percentage – 1.45%
Employer/Employee 2012 Maximum Withholding – No Limit
(No change from 2011)
Rate (flat rate withholding method) – 25%
Over $1 million – 35%
(No change from 2011)
The 2012 withholding tables have not been finalized, as Congress has not yet finalized their decision on whether to adjust the tax rates. Any changes in the withholding tables will be communicated once they have been announced.