Chamber provides update to 2020 employment laws

Attorney Brian Koegle briefs members of the Santa Clarita business community on changes to employment laws going into effect in 2020. February 04, 2020. Bobby Block / The Signal.
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As California’s employment-related laws continue to change, local business leaders gathered for an update recently at the Santa Clarita Valley Chamber of Commerce’s annual California Employment Law Update.

Attorneys Brian Koegle and David Poole of Poole Shaffery & Koegle LLP gave a thorough presentation during breakfast at the Hyatt Regency in Valencia, discussing the steps employers need to take in order to be in compliance in 2020.

Attorneys Brian Koegle and David Poole brief members of the Santa Clarita business community on changes to employment laws going into effect in 2020. February 04, 2020. Bobby Block / The Signal.

Here’s a breakdown of some topics discussed:

Overtime

Though many employers believe salaried employees are exempt from receiving overtime, that’s not the case in the state of California.

“Unless you are specifically able to take an employee out of that nonexempt category and fit them squarely into the perfect little box that is one of the exemptions under California law, they revert back to the default provision that is nonexempt,” Koegle said.

That being said, exemptions can be made if employees fall into the minimum salary threshold and their duties fall under certain categories, such as executive, administrative and other highly-compensated jobs.

Still, Koegle advised anyone categorizing their employees under one of the exempt categories speak with legal counsel, as many are doing it wrong. 

Attorney David Poole briefs members of the Santa Clarita business community on changes to employment laws going into effect in 2020. February 04, 2020. Bobby Block / The Signal.

“If you’re evaluating whether your employees fit within an exemption, a lot of times you see things very differently from the way they see things,” Poole said, adding that it’s always a good idea to document those job duties and responsibilities and confirm that with them on a regular basis. 

In terms of the minimum annual salary, though an exempt employee must make $54,080 per year in California in 2020, they are only required to make $35,568 per year at the federal level.

In California, that number will continue to increase as the state minimum wage increases, therefore limiting the number of employees who qualify for these exemptions.

On-call

In February 2019, under Ward v. Tilly’s Inc, the California Court of Appeals ruled that employees calling their employer prior to the start of their shift to determine if they should come into work is considered reporting to work.

Now, those employees must be paid for a minimum of two hours of work and no more than four hours at their regular rate of pay, even if they are informed they don’t need to report to work that day. 

“This is really going to change the structure of how retail and restaurants do business — it’s a major shift for them,” Koegle said.

Attorney Brian Koegle briefs members of the Santa Clarita business community on changes to employment laws going into effect in 2020. February 04, 2020. Bobby Block / The Signal.

Independent Contractors

“Much like the campaign against exempt employees, the Legislature has been really at war with the idea of independent contractors, primarily because they don’t receive benefits; (and) generally, there’s tax implications for that,” Poole said.

Of a room full of business leaders, approximately one-third still use independent contractors today. 

With the passage of Assembly Bill 5, the ABC test has been codified into the Labor Code and now applies across the board, making it so in order for businesses to classify employees as independent contractors, they must show the following:

  • Worker must be free from all control and direction of the hirer in connection with the work.
  • Worker performs work that is outside the usual course of the hiring entity’s business.
  • Worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity.
Attorneys Brian Koegle and David Poole brief members of the Santa Clarita business community on changes to employment laws going into effect in 2020. February 04, 2020. Bobby Block / The Signal.

“It is now a violation of the California Labor Code if you’ve misclassified an employee as an independent contractor,” Koegle said, adding that this law also has a retroactive application for the last three years.

That being said, Koegle suggests that anybody that an employer works with as a contractor has their own separate legal enterprise, an LLC, an S Corp. or C Corp., along with a federal employer identification number.

Anyone who is issuing a Form 1099, an IRS tax form used to report various types of wages, to a social security number will be on the Employment Development Department’s radar, and penalties can be up to $25,000.

Attorney David Poole briefs members of the Santa Clarita business community on changes to employment laws going into effect in 2020. February 04, 2020. Bobby Block / The Signal.

While there are some exemptions to this law, there are a number of lawsuits, as well as a few bills, currently in the works that could potentially change that in the coming months, though Koegle doesn’t suggest you hold out on those. 

According to data collected by the SCV Economic Development Corp., many local businesses are taking the “bury your head in the sand approach to managing these type of issues,” Koegle said. 

“It’s great that you’re here and we’re glad that you’re getting the information, but if you don’t go back and do something with it, it really isn’t going to do your business any good,” he added.

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