California has received $500,000 from the U.S. Small Business Administration to increase export activities among small businesses. The funding, part of the State Trade Export Promotion program, will boost trade in foreign markets, – including China, Europe, Southeast Asia, and Mexico, – and encourage exports of information technologies, food and agricultural products, consumer goods and medical equipment.
California is the one of the largest exporting states in the nation. The state exports more than $163 billion in products, about 11% of all U.S. exports. This international trade supports more than 706,000 California jobs. Top markets for California’s exports include Mexico, Canada and China.
“On average, more than 25 percent of California’s agricultural production is exported,” said California Department of Food and Agriculture (CDFA) Secretary Karen Ross. “This federal funding is a victory for farmers and ranchers, food manufacturers, and the rural communities where they operate.”
California’s State Trade Export Promotion (STEP) program is a partnership between the Governor’s Office of Business and Economic Development (GO-Biz), CDFA, the California Community Colleges Chancellor’s Office and the Centers for International Trade Development. The program brings together state, federal, private and nonprofit trade promotion organizations to promote export activities among targeted industries. California STEP is funded in part by a U.S. Small Business Administration grant.
In light of various emergencies and disasters throughout the state, the California Chamber of Commerce is educating employers about a few things they should know about paying employees, leaves of absences and planning ahead in emergencies.
Even in an emergency, employers must be mindful of obligations under state employment laws and consider pay issues for exempt and nonexempt employees related to office closures.
Employers must pay exempt employees a full weekly salary for any week in which any work is performed. If the business is closed for the whole week, however, employers don’t need to pay exempt employees.
In emergencies, special pay rules apply for nonexempt employees.
If your business shuts down for any of the following reasons, you must only pay nonexempt employees for the hours they worked prior to being sent home:
However, if you shut down your business at your discretion (and not for one of the above reasons), reporting time pay may be owed. When a nonexempt employee shows up for work as scheduled and is not put to work or is given less than half of his/her scheduled hours, the employee would be eligible for reporting time pay: pay for one half of the scheduled shift, no less than two hours and no more than four hours.
Of course, employers are always free to pay employees or let them use vacation or other personal time. Many employers may choose to provide some paid time during emergency situations. Just remember to be consistent!
Leaves of Absence for Emergency Personnel
Some of your employees may serve as volunteers for local fire departments or other emergency response entities. All employers must provide leaves of absence for employees who are required to perform emergency duty. Employers are not required to compensate the employee during this time off.
Leave for Health Issues
Employees may be entitled to time off to deal with health issues that occur as a result of the disaster.
For instance, employees may use their California mandatory paid sick leave for the care or treatment of a health condition for themselves or a family member, as defined by the law.
They also may be eligible for time off for family or medical leave for themselves or to care for family members with any serious health conditions under the federal Family Medical Leave Act (FMLA) or the California Family Rights Act (CFRA). The FMLA and the CFRA cover employers with 50 or more employees and provide a maximum of 12 weeks of unpaid leave in a 12-month period.
Employers may have obligations to reasonably accommodate an employee under the federal Americans with Disabilities Act (ADA) and the state Fair Employment and Housing Act (FEHA). Should an employee suffer a physical or mental injury because of a natural disaster, they may be entitled to protections under these laws.
School or Childcare Leave
Employers with 25 or more employees working at the same location may need to provide unpaid time off to employees whose children’s school or child care is closed due to a natural disaster, such as a fire, earthquake or flood. For emergency situations, the time must not exceed 40 hours per year.
Employers must remember their obligations to provide a safe workplace. Cal/OSHA is advising employers to take special precautions to protect workers from hazards from wildfire smoke.
Cal/OSHA has posted materials that provide guidance for employers and workers on working safely in conditions with heavy smoke caused by the wildfires.
The single, most important thing employers can do is create an Emergency Action Plan (EAP) and communicate that plan to employees. Employers should inform employees that the plan exists and what steps the plan outlines. As an employer, you have an obligation to create and maintain a safe workplace for your employees.
All California employers are required to have an EAP designating the actions that must be taken to protect employees from fire and other emergencies. California employers must also have a Fire Prevention Plan (FPP) that details the fire hazards your employees may face and how to handle a fire should the situation arise.
When employees are initially assigned to a job or transferred to a new position, the employer should review parts of the EAP and FPP employees must know so they can protect themselves in the event of an emergency. Employers should retrain employees if they change the EAP or FPP and should periodically conduct emergency training and drills.
When considering emergency situations, employers should plan how they will handle and communicate office closings and determine who will make the final decision on whether to close. Determine also if alternative workplaces are available, whether certain employees can work from home or whether to shut down all work during the emergency.
CalChamber members can find more information on Emergency Action Plans and Fire Prevention Plans during emergencies on HRCalifornia. Cal/OSHA offers resources as well. Not a member? See how CalChamber can help you.
Governor Edmund G. Brown Jr. signed legislation on October 12 mandating that small businesses provide a new protected leave of absence.
SB 63 (Jackson; D-Santa Barbara) was identified by the California Chamber of Commerce as a job killer.
Also signed today was AB 168 (Eggman; D-Stockton), which bans employers from inquiring about a job applicant’s salary history.
Both bills take effect on January 1, 2018.
SB 63 will require employers to provide 12 weeks of baby bonding leave to employees in addition to the myriad of other leaves of absence programs California already imposes. This bill affects small employers with as few as 20 employees and applies to those employees who:
Combined with other protected leaves, the bill could result in small employers having to provide up to seven months of protected leave for the same employee. This bill will have the greatest impact on employers with 20 to 49 employees who are not already required to provide family leave under the federal Family and Medical Leave Act or the state California Family Rights Act.
The bill also prohibits an employer from refusing to maintain and pay for coverage under a group health plan for an employee who takes this leave.
In addition, the bill carries the threat of litigation for employers. SB 63 labels an employer’s failure to provide a requested leave as an “unlawful employment practice.” The employer is subject to a lawsuit should the employee allege that his or her employer:
• Did not provide the 12 weeks of protected leave;
• Failed to return the employee to the same or comparable position;
• Failed to maintain benefits while the employee was out on leave; or
• Took any adverse employment action against the employee for taking the leave.
In addition, SB 63 will require the Department of Fair Employment and Housing, upon receiving funding from the Legislature, to create a parental leave mediation pilot program. Under the pilot program, within 60 days of receipt of a right-to-sue notice, an employer may request all parties to participate in the department’s Mediation Division Program. If the employer makes such a request, the bill would prohibit an employee from pursuing any civil action under these provisions until the mediation is complete, which would include an employee’s election not to participate in mediation. The bill would provide that the employee’s statute of limitations would be tolled during the course of the mediation, as specified. The pilot program will end on January 1, 2020.
Under AB 168 employers are banned from asking about a job applicant’s salary history and from relying on salary history information as a factor in determining what salary to offer an applicant. An employer could be penalized for failing to provide a pay scale for the position upon demand.
Any violation of the provisions in AB 168 carries a huge threat of costly litigation under the Labor Code Private Attorneys General Act (PAGA).
CalChamber will provide information, including a November webinar, to members about how to ensure compliance with these new laws and develop appropriate policies for their businesses.
Wage and hour changes are on the horizon once again.
In 2016, Governor Edmund G. Brown Jr. signed SB 3, making California the first state in the nation that committed to raising the minimum wage to $15 per hour statewide. Under the bill, California’s minimum wage increases annually so it hits $15 per hour for all businesses by 2023.
Large businesses with 26 or more employees began complying on January 1, 2017, and will reach $15 per hour in 2022. The increase in 2018 for large businesses is 50 cents — from the current rate of $10.50 per hour to the new rate of $11 per hour.
Small businesses with 25 or fewer employees had a one-year delay; they will see their first increase on January 1, 2018, and will have until 2023 to reach the $15 per hour rate. The increase in 2018 for small businesses is from the current rate of $10 per hour to the new rate of $10.50 per hour.
In the midst of all the statewide changes, various localities throughout California continue to pass their own ordinances that will affect how employees are paid.
Employers should start preparing for these changes by examining all pay practices that may be affected.
The staggered minimum wage increases over the next several years are as follows:
California employers must pay employees no less than the state minimum wage per hour for all hours worked.
When laws differ, employers must comply with the more restrictive requirement — in other words, the requirement that gives the biggest benefit to the employee. Since California’s state minimum wage is higher than the federal minimum wage of $7.25 per hour, most employers will be required to pay that rate. As mentioned above and discussed further below, local ordinances may also come into play.
The obligation to pay the state minimum wage can’t be waived by any agreement, including a collective bargaining agreement.
Remember that a top priority for state enforcement agencies is to stop employers from engaging in so-called “wage theft,” which includes not paying the minimum wage for all hours worked.
The minimum wage increase affects not only your nonexempt minimum wage workers, but also has other ramifications, such as exempt/nonexempt classification and posters and notice requirements, discussed below. Preparation, as always, is key.
The minimum wage rate change also affects overtime pay. Effective January 1, 2018, the overtime rate for minimum wage employees increases but varies depending on whether you’re a large or small business:
Exempt/nonexempt classification is always a tricky issue, as employers must ensure that employees meet the salary basis test for the particular exemption claimed.
For an employee to meet a “white collar” exemption from overtime (the commonly used administrative, executive or professional exemptions), California law states that the employee must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment, in addition to meeting all other legal requirements for the exemption.
Effective January 1, 2018:
Future increases will also affect the salary threshold.
Also, certain commissioned inside sales employees can be eligible for an overtime exemption under Wage Order 4 and Wage Order 7. Generally, the exemption applies if the employee earns more than 1.5 times the minimum wage and more than half of the employee’s compensation represents commission earnings. Employers will need to make sure that commissioned inside sales employees continue to meet this test after the January 1 minimum wage increase. Outside salespeople do not need to meet the minimum salary requirements.
Misclassification is costly. Employers who are unsure whether their employees ought to be exempt or nonexempt should always check with their legal counsel.
Posters and Notice Requirements
The minimum wage rate change affects notice requirements for the minimum wage posting, itemized wage statements and wage notices.
First, all California employers must post the state’s official Minimum Wage Order (MW-2017) in a conspicuous location frequented by employees. The official notice includes the increase for both 2017 and 2018.
Second, California employers must provide each employee with an itemized statement, in writing, at the time wages are paid (Labor Code Section 226). Among other mandatory information, the itemized wage statement must include all applicable hourly rates in effect during the pay period and the corresponding number of hours the employee worked at each hourly rate. Itemized wage statements will need to reflect any increased wages.
Finally, employers in California must provide nonexempt employees with a wage notice pursuant to Labor Code Section 2810.5. The written notice must be provided at the time of hire and again within seven calendar days after any information in the notice is changed. Among other things, employers are required to notify nonexempt employees, in writing, when there is any change to:
NOTE: If an employee’s rate of pay will increase on January 1, 2018, due to the state minimum wage increase, the employee must receive notice from his/her employer by January 7, 2018. However, if the employer has reflected the change on a timely itemized wage statement and the statement meets all legal requirements, the separate wage notice is not required.
Meals and Lodging
Most of California’s Wage Orders allow employers to credit meals and lodging furnished by the employer toward the employer’s minimum wage obligation (Section 10 of the Wage Orders).
The 2018 credit amounts for meals and lodging are listed on the official MW-2017.
The minimum wage increase also affects piece-rate employees. Piece-rate workers must receive at least the minimum wage for each hour worked. A law that took effect in 2016 requires payment of rest and recovery periods or other non-productive time at specified hourly rates.
Employers with piece-rate compensation systems need to ensure they are complying with the new minimum wage standard.
Draws Against Commissions
A commissioned employee may receive a sum of money that is intended as an advance, draw or guarantee against the employee’s expected commission earnings.
In California, employers must pay these sums at least twice per month. If an employee receives a draw against commissions to be earned at a future date, the “draw” must be equal to at least the minimum wage and overtime due to the employee for each pay period (unless the employee is exempt).
Employers with commissioned employees should make certain that any draw against future commissions uses the new minimum wage rate as a basis.
Tools or Equipment
When an employer requires that employees use certain tools or equipment, or when the tools or equipment are necessary for an employee to perform the job, the employer must provide and maintain the tools or equipment.
There is an exception, however, for employees whose wages are at least two times the minimum wage; they can be required to provide and maintain their own hand tools and equipment customarily required by the trade or craft in which they work.
If you require employees to provide and maintain their own hand tools and equipment, make sure that the employees earn at least two times the minimum wage rate in effect.
There is no distinction between adults and minors when paying the minimum wage. A limited exception exists for “learners,” but that exception does not depend on a person’s age.
“Learners” are employees who have no previous similar or related experience in the occupation. California’s Wage Orders permit you to pay learners 85 percent of the minimum wage, rounded to the nearest nickel. State law allows the subminimum wage to be paid for only the first 160 hours of work, after which the employee must be paid at least minimum wage.
The subminimum wage rate will increase to $9.35 per hour effective January 1, 2018, for employers with 26 or more employees. It will increase to $8.93 per hour for employers with 25 or fewer employees. Federal and state laws provide different definitions of learners. California employers must be careful to comply with both federal and state subminimum wage requirements and give employees the benefit of whichever law is more favorable to the employees.
If you use the “learner” rate, ensure that you follow the strict guidelines for when you can pay the lower rate and use the appropriate rate calculation beginning January 1. Keep accurate records of time worked and do not pay the subminimum wage after the employee reaches 160 hours of work.
Local Minimum Wage Ordinances
Keep in mind that some cities and counties in California adopted their own local minimum wage rates that may exceed the state rate. This is part of a growing trend in which several cities are enacting local ordinances.
If you’re covered by a local ordinance with a higher minimum wage rate, you will have to pay that rate to employees. In addition, if you are covered by a local minimum wage ordinance, you must make sure to post the current local ordinance poster.
Best Practices for California Employers
A 2014 California Chamber of Commerce job creator bill is being credited with encouraging some film and television productions to remain in or return to the state in a recent report from the California Film Commission.
The film commission report, released September 25, says the expanded Film and Television Tax Credit Program 2.0 led to a sustained 12% increase in hours worked in state, the relocation of a growing number of established TV series to California from out of state, and more filming outside the greater Los Angeles zone.
Program 2.0 resulted from the 2014 job creator AB 1839 (Gatto; D-Glendale; Chapter 413).
California GainsIn the two years of the expanded program, according to the film commission report, California has gained 38 feature film projects and 50 TV projects—eight pilots, two movies of the week, 27 TV series, one mini-series and 12 TV series relocating to California.
Tax credit projects are projected to spend $28 million across 10 counties outside of Los Angeles County, the report says.
All the projects are generating an estimated $3.7 billion in direct spending to the state, including $1.4 billion in below-the-line wages (for production workers and the like).
The 12 TV series relocating to California after previously receiving tax credits in other states are on track to spend more than $891 million in California, according to the film commission report.
Taking effect in January 2015, the five-year Program 2.0 more than tripled the size of California film and TV production incentives—from $100 million a year to $330 million a year through the 2019–2020 fiscal year.
Program 2.0 allows productions previously excluded from seeking the credits to become eligible for the funding. The newly eligible projects included big-budget feature films costing $75 million or more, TV pilots and one-hour series for any distribution outlet.
While eligibility is expanded, the program caps the maximum credit any one project can receive.
The report notes that each big-budget feature film employs thousands of workers and typically uses more than a thousand support businesses. Moreover, a big-budget film also may require the use of several large sound stages to build elaborate sets.
To encourage filming throughout the state, the program offers an additional 5% tax credit to productions that shoot outside the 30-mile zone around Los Angeles or have qualified expenditures for music scoring or track recording.
Local Economic Gains
The report notes that when productions film on location outside the Los Angeles area, they typically spend $50,000–$100,000 per day in the local region.
The spending benefits many small businesses, including grocers, hardware stores, gas stations, hotels and other retail businesses, as well as local hires for services such as catering and construction work.
Local governments gain from payments made to local police and fire departments, plus revenue from local permit fees.
Previous Job Creator Bills
Earlier legislation helping contribute to the return of film and television productions to California includes two 2012 CalChamber job creator bills. Both AB 2026 (Fuentes; D-Los Angeles; Chapter 841) and SB 1197 (R. Calderon; D-Montebello; Chapter 840) helped protect jobs in the film industry by extending the film tax credit for two years, until July 1, 2017.
For more information, see the Progress Report on film and television tax credit programs on the California Film Commission website, www.film.ca.gov.