State agencies must take seriously the requirement to conduct a timely, accurate economic analysis of major regulations, according to a just-released opinion by the 5th District Court of Appeal.
In a unanimous opinion upholding the trial court, the appellate justices found that the final economic impact analysis used in rulemaking must be based on evidence, as must the responses to public comments regarding nonspeculative economic impacts which introduce new evidence into the rulemaking file.
The California Chamber of Commerce filed a friend-of-the-court brief in the case.
The court also ruled that a state agency must address both intrastate and interstate economic competitiveness impacts and concerns.
In deciding this case, the appellate court rejected the application of a deferential standard of review to the state agency’s interpretation of its obligations under the Administrative Procedures Act (APA). In effect, the court held that the agency doesn’t get to decide for itself what the Legislature meant by holding the agency accountable.
The APA ruling in this dispute, John R. Lawson Rock & Oil, Inc. and California Trucking Association v. State Air Resources Board et al., Case No. F074003, centered around the adequacy of the economic analysis conducted by the Air Resources Board (ARB) when it adopted an amendment to a rule regulating diesel truck engines.
The California Trucking Association successfully argued that the analysis was a “rosy scenario without merit,” and that the economic analysis “merely evaluated the Amendments’ ‘benefits,’ and did not include any analysis of the Amendments’ potential ‘adverse economic impact[s]’ on affected businesses.”
The appellate court found that behavior unacceptable.
The court also rejected the agency’s willful ignorance of evidence of additional economic impacts, developed through the APA’s iterative regulatory analysis and review process.
That is, once an agency is made aware of relevant economic information—especially potentially adverse economic impacts—then it must address those impacts in good faith as it completes its final economic analysis.
The requirement that agencies conduct rigorous economic impact analyses was enacted by the Legislature in 2011 (SB 617; R. Calderon; D-Montebello). The CalChamber was a key supporter of the legislation and has worked closely with the Department of Finance to develop the rules by which agencies must comply with these requirements.
Joining the CalChamber in filing the amicus curiae brief in this case were the California Manufacturers and Technology Association, California Business Properties Association, California Retailers Association, Consumer Specialty Products Association, California Independent Oil Marketers Association, Automotive Specialty Products Alliance, National Elevator Industry and Pacific Merchant Shipping Association.
As of January 1, California employers must comply with strict rules passed under the new Immigrant Worker Protection Act (AB 450), which protects workers in the state from immigration enforcement while they’re on the job.
Under AB 450, all employers, regardless of size, must limit U.S. Immigration and Customs Enforcement (ICE) agents’ access to both the worksite and employee records, and must follow new notice obligations.
The Labor Commissioner and the Attorney General have authority to enforce the act’s provisions and employer missteps can result in fines of $2,000 to $5,000 for a first violation and $5,000 to $10,000 for each subsequent violation.
California employers can no longer consent voluntarily to allow ICE to enter nonpublic work areas or to access company records. Instead, ICE must present legal documentation in the form of a warrant or subpoena before employers can allow access.
The employer can take a federal immigration enforcement agent to a nonpublic area to verify the warrant, as long as no employees are present and the employer doesn’t provide consent to search nonpublic business areas in the process.
Employers cannot voluntarily allow ICE agents to gain access to, review or obtain employee records without a subpoena or judicial warrant.
The prohibition does not apply to Form I-9 or other documents for which a Notice of Inspection (NOI) was provided to the employer.
Employers must follow specific requirements related to Form I-9 inspections. For example, within 72 hours of receiving a Notice of Inspection, California employers must post a notice to all current employees informing them of any federal immigration agency’s inspections of Forms I-9 or other employment records.
Employers also have obligations once the inspection is over. Within 72 hours of receiving the inspection results, employers must provide each “affected employee” a copy of the results and a written notice of the employer’s and employee’s obligations arising from the inspection. The written notice must contain specific information and must be hand-delivered in the workplace, if possible. An “affected employee” is one identified by the inspection results as potentially lacking work authorization or having document deficiencies.
Unions also have the right to receive notices.
An employer that fails to follow any of these notice requirements can be fined between $2,000 to $5,000 for a first violation and $5,000 to $10,000 for each subsequent violation.
At the same time, federal penalties for Form I-9 violations can range from a couple hundred dollars to more than $20,000.
California employers need to ensure that supervisors and any employees who are likely to interact with authorities arriving at the worksite are aware of the limitations on ICE access and the prohibition against voluntarily granting access without particular documentation.
Consider designating a trained point-person(s) for front-line staff to contact if immigration agents arrive at the worksite. These individuals should be trained to ask for a warrant or subpoena.
California employers also need to create and document processes to meet all pre- and post-inspection notice requirements. Since the 72-hour timeframes are short, standardized posting and notice processes will help employers meet their compliance obligations.
The Labor Commissioner has until July 1, 2018, to create a model posting template. The California Chamber of Commerce has developed a template for CalChamber members to use to meet the posting requirement until the Labor Commissioner develops an official template.
The CalChamber Notice to Employees: Government Inspection of Employment Eligibility Records is available for members in English and in Spanish in the Forms & Tools section on HRCalifornia.com.
The act also makes it unlawful for employers to reverify the employment eligibility of current employees in a time or manner not allowed by federal employment eligibility verification laws.
Federal law already prohibits unlawful reverification practices, such as reverifying unexpired documentation. The new state law adds an additional state civil penalty of up to $10,000.
Compliance in this area is going to be tough and only time will tell what legal challenges this new law may bring. In the interim, however, employers will need to comply.
Given the potential conflicts or confusion between an employer’s obligations under federal law and these new California requirements—as well as the federal administration’s statements that it intends to increase worksite enforcement actions in 2018—employers should consult a labor or immigration attorney with any questions or concerns.
More detailed guidance is available on HRCalifornia.
The Internal Revenue Service (IRS) has released income tax withholding information for 2018 (Notice 1036) that shows new rates for employers to use. The 2018 withholding tables reflect changes due to the tax reform legislation enacted last month. A withholding table shows payroll service providers and employers how much tax to withhold from employee paychecks, given each employee’s wages, marital status and number of claimed withholding allowances.
The IRS instructs employers to begin using the 2018 withholding tables as soon as possible but no later than Feb. 15, 2018. Employers should continue to use the 2017 withholding tables until they implement the 2018 withholding tables.
Once employers implement the new tables, many employees will begin to see changes in their paychecks reflecting the tax reform.
The new tax law makes a number of changes for 2018 that affect individual taxpayers. The new tables reflect the:
More information on the updated withholding tables is available in the IRS’s Withholding Tables Frequently Asked Questions.
W-4 Update Coming Soon
The IRS is currently working on revising the Form W-4 to reflect additional changes in the new law, such as changes in available itemized deductions, increases in the child tax credit, the new dependent credit and the repeal of dependent exemptions.
Until a new Form W-4 is issued, employees and employers should continue to use the 2017 Form W-4.
Employees do not need to fill out a new W-4 right now — the new withholding tables are designed to work with the Forms W-4 that workers have already filed with their employers to claim withholding allowances. This, according to the IRS, will minimize the burden on taxpayers and employers.
The IRS is also revising the tax withholding calculator on their website to help employees update their withholding in response to the new law or other changes in personal circumstances in 2018. The IRS anticipates this calculator should be available by the end of February. Taxpayers are encouraged to use the calculator to adjust their withholding once it is released.
On the Horizon
The IRS plans to help educate taxpayers about the new withholding guidelines and calculator. The effort will be designed to help workers ensure that they are not having too much or too little withholding taken out of their pay.
Check out the IRS’s Resources for Tax Law Changes for more information.
For 2019, the IRS anticipates making further changes involving withholding. The IRS will work with the business and payroll community to encourage workers to file new Forms W-4 next year and share information on changes in the new tax law that impact withholding.
“The IRS appreciates the help from the payroll community working with us on these important changes,” said Acting IRS Commissioner David Kautter, in a statement. “Payroll withholding can be complicated, and the needs of taxpayers vary based on their personal financial situation. In the weeks ahead, the IRS will be providing more information to help people understand and review these changes.”
Want to know more about deductions from wages? CalChamber members can find forms and Q&Asin the HR Library. Not a member? See how HRCalifornia can help you.
Governor Edmund G. Brown Jr. this week proposed the final budget of his gubernatorial career, proposing to spend a record $190 billion without raising taxes and setting aside $13 billion in a rainy-day reserve.
For the first time since 1998, it appears that a retiring governor will not pass along a budget deficit to his successor. Nonetheless, the Governor insisted that fiscal prudence must guide decisions this year, emphasizing that “we prepare for the recession, not when it comes, but years before.”
The Governor noted that by the end of the next fiscal year, the economic expansion will be the longest post-war period of uninterrupted growth. A moderate recession, according to the Department of Finance, would drop state revenues by more than $20 billion annually.
The day after the Governor released his budget proposal, the California Chamber of Commerce hosted Department of Finance Director Michael Cohen at a Luncheon Forum where he provided attendees with details on the proposed budget.
With respect to education, the administration proposes fully funding the Local Control Funding Formula, a finance allocation that eliminates most categorical funding programs in favor of aiming supplemental funding toward poor students, English learners and children in foster care. Overall spending on public schools and community colleges will have increased by 66% in the seven years since the depths of the recession.
In the Governor’s proposal, funding for the University of California will increase by about 2%, and for the California State University by 1%.
For community colleges, the budget includes an overall increase of 4% and implements legislation from last year that waives tuition for first-time, full-time students. The budget also proposes the creation of an entirely online two-year degree aimed at working Californians.
To address the state’s long-term workforce needs, the Governor proposes providing $200 million to support K–12 career-technical education programs that are aligned with industry skills, and additional funding for industry experts to support these programs.
The idea is to maintain a predictable, targeted and sustained funding stream to support an industry/education workforce development collaboration.
Following up on last year’s increase in transportation revenues, the administration plans to spend $4.6 billion in the next fiscal year on various highway and bridge maintenance, rehabilitation and operational improvements.
The budget also includes funds to restart the state’s construction program to complete 10 courthouses.
The state’s judicial branch will be provided additional funding to support efforts by the Judicial Council to improve and modernize trial court operations.
The Legislature in 2017 extended the cap-and-trade program, which is designed to enable reductions in greenhouse gas emissions, through 2030.
A consequence of this extension was to stabilize the existing program and ensure a steady stream of new revenues to the state, potentially amounting to billions in new taxes for the Legislature to spend. The Governor will outline his plan for new spending later this month in his state-of-the-state address.
The full summary of the Governor’s budget proposal can be found at www.ebudget.ca.gov.
Last week, California businesses began to legally sell recreational marijuana in California. More than 400 state licenses have been issued so far, but the rollout may be slow. Cities or counties must first approve commercial marijuana sales, and localities can choose to ban or restrict recreational marijuana shops.
On November 8, 2016, Californians voted to pass Proposition 64, also known as the Adult Use of Marijuana Act, which legalized the recreational use of marijuana for adults 21 years old and older. Although marijuana became legal to smoke on November 9, 2016 (the day after the election), licensed recreational marijuana sales were not allowed until January 1, 2018.
But what about smoking weed at work? When it comes to the workplace, California employers can take a deep breath of fresh air, because the recreational use of marijuana stops at the workplace. Employer policies related to drug possession, use and impairment, as well as testing, are not compromised with the legalization of marijuana use under Proposition 64.
Proposition 64 explicitly states that it is intended to “allow public and private employers to enact and enforce workplace policies pertaining to marijuana.” The initiative also provides that it will not be construed or interpreted to amend, repeal, affect, restrict or pre-empt:
The rights and obligations of public and private employers to maintain a drug and alcohol free workplace or require an employer to permit or accommodate the use, consumption, possession, transfer, display, transportation, sale, or growth of marijuana in the workplace, or affect the ability of employers to have policies prohibiting the use of marijuana by employees and prospective employees, or prevent employers from complying with state or federal law (Section 11362.45 (f)).
These provisions distinguish Proposition 64 from the failed 2010 initiative, which did not protect employer policies concerning the use of marijuana in the workplace. Therefore, even with the passage of Proposition 64, employers may continue to prohibit use, possession and impairment at work and may continue to test for use when appropriate. Proposition 64 is not intended to interfere with these workplace policies or practices.
Pre-employment drug testing in California usually should be done only after a conditional job offer has been made.
Otherwise workplace drug testing is usually subject to a “reasonable suspicion” test —allowing an employee to be drug tested only when specific objective facts indicate abuse. Random drug testing in California is rarely allowed; although certain industries or professions, such as transportation, have stricter drug testing requirements.
Employers with concerns about recreational marijuana use will want to review existing policies and remind employees not only about the company’s drug-free workplace policy and practices but also to specify that marijuana is prohibited.
Still unsure about legalized marijuana and drug-free workplace policies? CalChamber offers a free white paper on Marijuana and Workplace Policies (CalChamber members can download the white paper). CalChamber members can also view How To: Oversee Pre-Employment Drug Testing. Not a member? See how HRCalifornia can help you.