What is the CARES Act?
The CARES Act is federal legislation designed to offset the impact COVID-19 has had on the U.S. workforce and economy. It was signed into law on March 27, 2020. The new law infuses $2 trillion into the U.S. economy through a combination of federal relief loans, such as those available under the Paycheck Protection Program, unemployment benefits, tax credits, and other benefits.
The CARES Act has two important components for eligible employers: an Employee Retention Credit and a deferral of the employer share of 2020 Social Security taxes. If you continue to operate and pay employees during 2020, you may be eligible for one or both of these benefits. See below for more information.
|Note: If you have any questions regarding the CARES Act, please contact your accountant or legal professional, or see the IRS website for more details.|
How do these benefits interact with other CARES Act relief programs?
If you receive a loan under the Paycheck Protection Program, your ability to receive benefits through other components of the CARES act may be reduced or eliminated.
- If you received a loan through the Paycheck Protection Program, whether or not any portion of that loan is forgiven, you’ll be unable to claim the Employee Retention Credit.
- If you received loan forgiveness through the Paycheck Protection Program, you’ll be unable to defer the employer share of 2020 Social Security taxes for any deposits due after the date of the loan forgiveness.
- If you have any taxes that were due to be deposited on or prior to the date of the loan forgiveness, you can continue to defer these tax payments until the applicable payment dates in 2021 and 2022.
|Track the provisions found under the CARES Act in QuickBooks Track your deferral payments for Social Security tax paymentsSet up and track the Employee Retention Credit under the CARES Act|
What is the Employee Retention Credit?
Under the CARES Act, an eligible employer may be able to offset the impact of COVID-19 with an Employee Retention Credit. You must continue to pay employees during a COVID-19 related closure and carry on a business at some point during 2020 to be eligible for the credit, but all operations of a tax-exempt organization are treated as a trade or business under the statute.
A qualifying closure occurs during any calendar quarter of 2020 in which:
- The operation of your trade or business is fully or partially suspended due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19); or
- Your gross receipts are less than 50% of your gross receipts for the corresponding quarter in 2019
This credit is not available to businesses that receive a loan under the Paycheck Protection Program.
Generally, if your business meets these requirements, you may be eligible to receive a tax credit that includes, but is not limited to:
- A refundable tax credit for up to 50% of the total wages paid to employees during the closure.
- The maximum you can receive is $10,000 of wages ($5,000 of credits) per employee.
What employees and wages can be included in computing the Employee Retention Credit?
The Employee Retention Credit is a refundable tax credit for up to 50% of qualified wages up to $10,000 of wages from March 13, 2020 to December 31, 2020. Meaning, you can take up to $5,000 in credits per eligible employee until the end of 2020.
|Update: With the passage of the Consolidated Appropriations Act and the American Rescue Plan Act of 2021, the Employee Retention Credit has been extended to December 31, 2021. The Qualified Wages for the credit were increased to 70% (up from 50%) of up to $10,000 per quarter through December 31, 2021. The definition of a large employer was also updated to employers that had more than 500 employees on average in 2019 (it was originally more than 100 employees on average in 2019). Additionally, beginning June 30, 2021, a feature was added for new businesses that have been operating after February 15, 2020.|
Your workforce size
The wages an eligible employer can include depends on the average number of full-time employees it had during the calendar year 2019.
Average of more than 100 employees
If you had an average of more than 100 employees, you can claim any wages paid to employees who are not working due to the closure.
Average of more than 100 or fewer employees
If you had an average of 100 or fewer employees, you can claim any wages paid to an employee, working or not, during the closure.
Coordination with employer portion of health plan expenses
If your wages include the employer portion of group health care costs, you may include these expenses in the qualified wages. For the purposes of the credit, you may include this expense in the calculation of the qualified wages.
Coordination with other wage credits
If you received a credit from other wage credits, such as one’s found under the FFCRA, you may not include those paid leave credits as qualified wages in your totals for the Employee Retention Credit.
You can’t include wages for any employee’s wages from claims to Work Opportunity Tax Credit or other claims paid from the family and medical leave credit under Section 45S of the Internal Revenue Code.
How can I defer payment of the employer portion of Social Security taxes?
Under the CARES Act, you may be able to defer your payment of the employer share of the Social Security taxes (6.2% of wages up to the Social Security ceiling) that accrue from March 27, 2020 through, and including, December 31, 2020. 50% of the deferred Social Security taxes are due by December 31, 2021, with the remainder due by December 31, 2022.
|Important: You, as the employer, are responsible for tracking and submitting the deferred payments.|
The deferral of Social Security taxes is not available for taxes that are due to be deposited after you receive debt forgiveness under the Paycheck Protection Program.
Regulations and guidance from the SBA and the U.S. Department of Treasury on the PPP are evolving rapidly, and the information contained herein be outdated. Please refer to the latest guidance from SBA and Treasury to confirm current program rules. The funding described in this email is made available to businesses located in the United States of America and are not available in other locations. This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. does not warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.
Filed Under: Labor & Employment
Recent decisions from California appellate courts and the Ninth Circuit Court of Appeals impact employers in the state in some key areas. Issues settled among the recent decisions include the method of assessing an employee’s compensation as it relates to calculating the overtime rate, the rounding of time punches as related to meal breaks, and Family Medical Leave Act (FMLA) leave claims for “rotational employees”.
Per Diem Benefits As Part Of Overtime Compensation
In the recent class action Clarke v. AMN Services, LLC, the Ninth Circuit considered whether per diem payments should be included as part of their regular wage rate when calculating overtime pay. Each week, the defendant healthcare staffing company, ANM, paid its traveling clinicians a per diem benefit when they were required to work more than 50 miles from their homes. The clinicians brought a class-action lawsuit against ANM, arguing that the company had wrongly excluded the per diem benefits from their regular rate of pay under Fair Labor Standards Act. This exclusion had the effect of decreasing their rate of pay for overtime work. The Ninth Circuit Court ruled that, since the per diem benefits operated to compensate the clinicians for their work, rather than to reimburse them for expenses that they incurred, like gas costs or other travel-related expenses, the benefits should have been included in the clinicians’ regular rate of pay when calculating overtime pay.
No Rounding Time On The Clock For Meal Breaks
While federal law and California case law have generally permitted employers to round punch-in and punch-out times, the California Supreme Court recently considered the issue of rounding time on the clock with regard to meal breaks specifically. In Donohue v. ANM Services, LLC, the company’s timekeeping system rounded its employees’ punch times to 10-minute increments. With that system, an employee who punched out for lunch at 12:32 PM (rounded back to 12:30 PM) and punched back in from lunch at 12:55 PM (rounded up to 1:00 PM) was documented to have taken a lunch break of 30 minutes, even though they really only had a 23-minute break. The Court said that, although rounding of time is generally regarded as a fair labor practice, rounding times clocked in and out for meal breaks is not permissible. Finding that “even relatively minor infringements on meal periods can
cause substantial burdens to the employee,” the Court pointed to “health and safety concerns” that are the reasons behind meal break requirements in federal and California law, and ruled that the practice of time rounding in that context would violate that purpose.
Weeks Already Off May Still Count As Workweeks Of Leave For FMLA
In Scalia v. State of Alaska, the Ninth Circuit Court of Appeals considered whether already-scheduled weeks off were to be counted as workweeks for leave under the federal Family and Medical Leave Act (FMLA). The FMLA allows eligible employees to take “12 workweeks of leave” for personal or familial medical issues. In this case, the U.S. Secretary of Labor argued that “rotational employees,” whose schedules consisted of one week of work followed by one week off, were entitled to 24 weeks off, as their already-scheduled “off weeks” should not be counted as “workweeks of leave” for purposes of FMLA leave. The Ninth Circuit disagreed, siding with the State of Alaska, and ruled that the “workweek” is not based on the individual employee’s work schedule, but rather is just a week-long period during which the employer is in operation. Therefore, the state workers are only entitled to 12 weeks of FMLA leave, even if they already would have had half of those weeks off due to their rotating shifts.
California Employer Lawyers Are Here For You
Backed by more than two decades of experience, Mohajerian Law Corporation is skilled at helping employers successfully handle a vast range of labor and employment matters. We are ready to help your business meet its unique transactional, regulatory and litigation challenges. To find out more about how Mohajerian Law Corporation can help your business, call (310) 556-3800 or contact us online.
Many people may feel that the COVID pandemic is on its way out, as vaccinations have become more widespread and more people have some immunity from previous exposure to the virus. However, experts warn that society is far from the end of the crisis. With this in mind, California legislators have enacted some new labor laws that will require employers to keep the virus in their minds, and in company policies, for some time to come.
New Reporting Requirements For Potential Exposure In The Workplace
Under the new amendments, California employers are required to notify their employees within one day of becoming aware of a potential exposure at the worksite. The company must also notify the union representative, if applicable. If there are three or more confirmed or probable cases in the workplace, the employer must report the outbreak to the local health department.
Companies’ reporting obligations arise when the employer becomes aware of a case of COVID-19 in a “qualifying individual,” which is defined as an employee who has:
- been confirmed to have a positive case by laboratory testing or by diagnosis by a licensed health care provider;
- received an isolation order from a public health official; or
- died due to COVID-19.
The reporting requirements are both thorough and immediate when the company learns of exposure in the workplace. Within one business day of learning of the potential exposure, the employer must notify all employees about it. If there were any subcontracted workers at the worksite during the time that any employee was in the infectious period of the virus, the company also must notify the workers’ employer, which may be a staffing agency.
The notice must be in writing in English and, if applicable, in the non-English language understood by a majority of workers. It must state the dates that the infected worker was at the site, but it cannot identify the individual by name or with any information that could give away the person’s identity.
In addition to providing written notice of the exposure, the employer must supply employees with information regarding benefits that they may be entitled to use, as well as options for COVID-related leave, worker’s compensation, and paid sick leave if they have been exposed. They also are required to inform the workers of anti-discrimination and anti-retaliation policies that protect employees when they use those benefits. Finally, the employer must explain the company’s disinfection and safety plan to the employees to prevent additional exposure, as per Centers for Disease Control and Prevention (CDC) guidance.
Notifying The Union
If the company’s workers are unionized, the employer must notify the union representative of the workers’ potential exposure. As with notifying the employees, the employer is required to do this within one day of becoming aware of the COVID-19 case.
Reporting To The Health Department
Unlike with the other required reports, the company only must report to the local health department if there is an “outbreak” of COVID cases at that worksite. The CDC defines the term “outbreak” as three or more confirmed or probable cases of COVID-19 in the workplace within a 14-day period. The cases must be from different households. Also, they cannot be identified as a close contact in any other COVID-19 case investigation. Once the employer is aware of an outbreak, they have 48 hours to report the outbreak to the health department.
California Attorneys Who Represent Employers
Mohajerian Law Corporation has more than two decades of experience helping California employers in all types of labor and employment matters including regulatory compliance, execution of legal contracts and policies, and litigation. Our knowledgeable employer-side attorneys are here for you and will help ensure that your business’s interests and rights are protected. Contact Mohajerian Law Corporation by calling (310) 556-3800 or by contacting us online.
In 2021, new labor laws in California may impact how employers relate to their employees in some important ways. Some of the most significant changes come in the form of amendments to the existing California Family Rights Act (CFRA).
One significant change is in the size of the company covered by the CFRA. Previously, the requirements applied to companies that employed at least 50 people. Under the revised law, companies with as few as five employees may now be subject to the regulations. This substantial change greatly widens the scope of the CFRA and means that many more companies must now learn and follow the regulations. There are some provisions, however, that even larger companies will have to learn, now that the law has been amended.
Time Off For A New Child Or A Medical Condition In The Family
The amended law changes the requirements as to how much time off employers are required to allow employees who have had a child (by birth or adoption) or who experience another qualifying medical situation. Under the new provisions of the CFRA, employers are obligated to allow covered employees to take up to 12 weeks of unpaid, job-protected time off in a 12-month period following the birth (or adoption or fostering) of a child, or to care for a personal medical condition.
The CFRA allows an employee this leave to care for a child, parent, spouse, or domestic partner with a medical condition requiring the employee’s care. With the new amendments, the law now also covers time off to care for three new categories of family members: grandparents, grandchildren, and siblings.
Previously, an employer was not required to grant an employee CFRA leave if the company employed fewer than 50 people within a 75-mile radius of the worksite. The new revisions to the CFRA eliminated this 75-mile restriction. However, the law continues to require that the employee has to have been with the company for over a year and must have worked at least 1,250 hours at the company during the previous span of 12 months in order to be entitled to leave under the CFRA.
Family Leave For Both Parents At The Same Company
If a company employs both parents of a new child, the company is required to provide them both with up to 12 weeks of unpaid, job-protected leave for bonding with the new family member. Along with the changes, the law eliminated the New Parent Leave Act (NPLA) beginning at the start of 2021, because the updates to the CFRA made the law so broad that it now covers all of the companies and issues that the NPLA covered, making the NPLA redundant and unnecessary.
Family Leave For Military Service In The Family
The amendments to the CFRA also involved changes to the Paid Family Leave program. The law now allows an employee to take time off to be involved in certain situations (“qualifying exigencies”) that relate to the active duty service, or a call to active duty, in the U.S. Armed Forces, for an employee’s spouse, domestic partner, child, or parent.
California Labor, Employment Attorneys Are Here For You
With more than two decades of experience defending the rights and interests of employers, Mohajerian Law Corporation has the skill and discernment to help your business meet its unique challenges and opportunities. Mohajerian Law Corporation offers a host of labor and employment services in this respect. Find out more about how Mohajerian Law Corporation can help your business by calling (310) 556-3800 or by contacting us online today.
Franchises in the fast-food industry are facing many challenges as the economy begins to recover from the massive set-backs caused by the pandemic. One such challenge is finding adequate numbers of qualified workers. Despite a current unemployment rate of around 6% in the U.S., nearly double the pre-pandemic rate, the labor market remains one of the biggest challenges for fast-food franchises.
In March of 2021, the country added some 280,000 jobs in the leisure and hospitality industry, which includes the restaurant industry, but the hiring rate still was not enough to meet the industry’s need. Some franchises have turned to unconventional methods to try to gain much-needed staff.
In November of last year, Taco Bell held a mass-hiring event in the parking lots of 400 of its locations, in an attempt to fill 2,000 positions. With plans to bring on at least 5,000 new employees by the end of April, Taco Bell held another round of these job fairs at more than 2,000 of its stores this month. Through this hiring blitz, the franchise hopes to make up for the slower rate of hiring that its stores have had due to the pandemic. In truth, the staffing challenges pre-date the pandemic, and many fast-food chains are responding by raising starting pay rates to levels above the minimum wage and by implementing other benefits in an effort to bring in and keep top talent.
Tuition Benefits Shown To Help Retain Employees
More and more franchises are using creative means to attract and retain workers, including offering tuition benefits to their employees. These programs allow employees to pursue college degrees with financial assistance from the company. Many of the leading names in the quick service restaurant field, especially, have added or increased tuition assistance programs for their workers as an added perk to attract top talent. Taco Bell, Chipotle, and KFC are among the growing number of restaurant chains turning to these benefits to improve employee retention.
Overall, companies that have used such programs have seen positive results, including higher retention rates among those who have taken advantage of the education assistance through their workplace. Chipotle has reported that the workers who move forward with their education through its program are more likely to move into management positions with the company, thereby strengthening the internal growth of the company by investing in its current employees.
Supply Chain Challenges Lead To Increased Prices
In addition to labor challenges, many franchise restaurants are struggling with issues related to supply-chain limitations. For example, the pandemic has affected the availability and price of ketchup, a key condiment for a major portion of the industry. With the transition to higher rates of takeout over eating in restaurants, and with the attempt to minimize contact that could spread germs, quick service restaurants turned almost exclusively to using ketchup packets. The increased demand and insufficient availability have caused prices to increase by 13%. Long John Silvers, which has about 700 locations nationwide, reportedly spent half a million dollars more on ketchup packets during 2020 than it had in previous years. Even with higher prices, though, supply is limited. As in-person dining facilities reopen, some business owners have even turned to purchasing ketchup from retail stores to meet the demand.
California Franchise Attorneys
The laws affecting franchisors and franchisees might come off to you as complex and overwhelming. Because of this, it is recommended that you consult with an experienced franchise lawyer to ensure that your business succeeds with its endeavors. Mohajerian Law Corporation is dedicated to helping California franchisors and franchisees with various legal services including the negotiation of agreements and the resolution of disputes. To learn more about how we can help you, touch base with Mohajerian Law Corporation by calling (310) 556-3800 or by contacting us online.
Filed Under: Franchise & Distribution
While many small, independent businesses struggled to meet the unprecedented challenges of the pandemic in 2020, franchises generally were fortunate to have a support network built into their businesses. Franchises took different approaches to dealing with the pandemic. Businesses in some industries closed completely for many months, while others implemented changes that allowed them to keep providing services while better protecting the health of their customers and employees. These changes may have included going to a fully online presence, increasing home delivery services, or allowing employees to work remotely.
Predicting A Franchise Boom For 2021
Franchise business experts see a potential boom in franchise growth during 2021. With an unemployment rate of about 6 percent, not only is there a surplus of blue-collar workers looking for jobs, but there also is a large number of skilled professionals who have found themselves unemployed due to the pandemic. Many of these unemployed professionals, as well as other professionals who have simply reassessed their employment situations, may want more control over their future career. Purchasing a franchise may allow them this control without requiring them to start from scratch to open a new business.
The pandemic has made it easier for people to get the capital to do this, removing some penalties for withdrawals from retirement accounts and maintaining low interest rates for loans. The larger pool of potential franchisees has created the potential for a growth spurt for franchise businesses.
Even real estate conditions may be ripe for franchise growth. Unfortunately, small businesses are likely to continue to suffer and close before the restaurant industry can recover from the pandemic’s impacts. Experts anticipate that as many as 100,000 businesses will close this year in the restaurant industry. These predicted closures would create a potential abundance of available locations for new franchisees to set up shop.
Recruiting New Talent
Though the pandemic and its effects on small businesses are not in the past just yet, improving market conditions and widespread vaccinations may contribute to ideal conditions for companies that are prepared to seize the opportunity and try to recruit professionals to open new locations for their franchise. In order to be better prepared for the growth to come, experts recommend that these franchisors focus their efforts in the areas of strategic planning, documentation systems, site assessment, marketing, and franchisee standards. To recruit franchisees, franchisors may benefit from emphasizing the support that the company provided to its franchisees through the tough times of the past year, and highlighting improvements in policies and systems that came about as a result.
Continuing Improvements To Business Operations
Specialists in franchising recommend that franchisors use this time to give new thought to their systems and processes in all areas across their businesses. Other experts in the field believe that it is likely that many of the upheavals of the pandemic-time business model will remain and grow as factors in the franchise’s business model. Adjustments that became widespread in 2020, such as adding delivery or curb-side pickup options and improving online ordering and web presence, have revealed unexpected opportunities for growth and development.
Telling Your Company’s Story
Another way that franchisors can capitalize on the outstanding growth opportunities of the coming year is to invest in marketing and customer experience improvement, so as to lure back consumers who have backed away from active support of businesses in the past year. To reconnect with the community, franchisors may focus on clearly and effectively telling the story of their companies’ efforts during the pandemic. They could highlight how they supported franchisees and continued to serve customers throughout the past year. This approach of relating with the public may facilitate a boom in franchises’ business, as businesses and consumers alike begin to return to a semblance of ‘normal,’ or adapt to the post-pandemic ‘new normal.’
California Franchise Attorney
Mohajerian Law Corporation helps California franchisors and franchisees by offering them a wide range of cost-effective and efficient legal services relating to contracts, regulatory compliance and dispute resolution. Reach out to Mohajerian Law Corporation by calling (310) 556-3800 or by contacting us online to learn more.
Filed Under: Franchise & Distribution
An employee might complain of retaliation if they face negative consequences after raising a workplace concern or complaint. A retaliation lawsuit might cost you a lot of money in the form of penalties, settlements, and legal fees. Use the following tips to avoid retaliation complaints from your employees.
Keep Complainants’ Identities Confidential
Some of your supervisors or managers might retaliate against an employee who paints them in a bad light. For example, an employee who complains about racial jokes in the cafeteria might face retaliatory actions from the relevant supervisor.
A good way to avoid such retaliation is to keep the employee’s identity confidential. Investigate the complaint and take appropriate action without mentioning the person responsible for the original complaint.
Keep Communication Channels Open
Let your employees know that you are accessible and that they can reach you with any information. Keeping the channels of communication open is especially useful for victims of alleged retaliation. Help the employees understand the company’s anti-retaliation policy. Encourage the alleged victims to report any negative experiences they might have in the workplace.
Explain Disciplinary Actions
Employees who face disciplinary actions sometimes claim retaliation even where retaliation doesn’t exist. Such a complaint is especially likely if an employee faces genuine disciplinary action soon after making a complaint.
In such a case, you don’t have to abandon your disciplinary policy. Rather, go the extra mile to explain to the employee why you are disciplining them. Show any documentary evidence you might have for the employee’s actions.
Watch Out for Red Flags
Some victims of retaliation might not speak up. Some people prefer to handle things on their own. Others might not speak up for fear of worsening their situations. However, retaliation is bad whether someone reports it or not.
Therefore, you should always be on the lookout for signs of retaliation in your workplace. You should be especially keen after an action that might trigger retaliation. For example, pay attention to your workplace when an employee complains about a manager or supervisor. Telltale signs of retaliation include:
- Increased scrutiny of a complainant
- Inconsistent documentation of employee conduct
- Inconsistent review of employees
Don’t jump to conclusions if you suspect something amiss. Investigate further before taking action.
Take Action If Retaliation Occurs
Employers who look the other way when retaliation occurs in their workplace encourage the vice. Take relevant action if an employee complains of retaliation. Taking action may include:
- Preserving evidence, such as emails or documents, related to the complaint
- Conducting an internal investigation
- Warning or disciplining the perpetrators as the circumstances demand
- Consulting legal counsel if necessary
Taking action will also encourage future victims to speak up.
Establish a Clear Anti-Retaliation Policy
Every company should have an anti-retaliation policy from its conception. Establish such a policy as soon as possible if you don’t have one. Your policy should have:
- A definition of what constitutes retaliation
- Actions to take (such as who to inform) on suspicion of retaliation
- Red flags that might constitute retaliation
Review and update the policy as necessary. Ensure your policy is consistent with relevant employment laws.
Provide Relevant Training
Your anti-retaliation policy might not help much if your employees don’t understand it. The people in charge, especially managers and supervisors, should especially understand how to avoid retaliation or its appearance. Provide training, for example, in the form of workshops to ensure everyone understands your anti-retaliation policy.
The above tips should help you avoid retaliation complaints. However, you have to deal with all retaliation complaints, whether they are genuine or not. Contact Mohajerian Law Corp if an employee has raised a retaliation complaint. We will review your case, advise you, and help you defend your rights.
DONOHUE v. AMN SERVICES, LLC S253677
Opinion of the Court by Liu, J.
Under California law, employers must generally provide employees with one 30-minute meal period that begins no later than the end of the fifth hour of work and another 30-minute meal period that begins no later than the end of the tenth hour of work. (Lab. Code, § 512, subd. (a); Industrial Welfare Commission (IWC) wage order No. 4-2001, § 11(A) (Wage Order No. 4).) If an employer does not provide an employee with a compliant meal period, then “the employer shall pay the employee one additional hour of pay at the employee’s regular rate of compensation for each workday that the meal . . . period is not provided.” (Lab. Code, § 226.7, subd. (c); Wage Order No. 4, § 11(B).)
In this case, we decide two questions of law relating to meal periods. First, we hold that employers cannot engage in the practice of rounding time punches — that is, adjusting the hours that an employee has actually worked to the nearest preset time increment — in the meal period context. The meal period provisions are designed to prevent even minor infringements on meal period requirements, and rounding is incompatible with that objective. Second, we hold that time records showing noncompliant meal periods raise a rebuttable presumption of meal period violations, including at the summary judgment stage.
On March 18, 2020, President Trump signed into law H.R. 6201, the Families First Coronavirus Response Act. The main provisions of the Act that will have the greatest impact on employers will be in effect within 15 days (no later than April 2nd) and will remain in place through December 31st, 2020.
There are new requirements for Paid Sick Leave and expanded FMLA provisions. The paid sick leave requirements are in addition to those already in effect at the state or local level and the new FMLA provisions apply to almost all employers (not just those with 50 or more employees within 75 miles).
The highlights of the Act:
The Act Applies to companies with fewer than 500 employees.
There is no requirement for tenure of employment and the leave is a grant (not accrued) so the appropriate full amount is available immediately.
Full-time employees must be provided with 80 hours of paid sick leave and part-time employees are eligible for paid sick leave equivalent to the average number of hours they work over a two-week period.
The paid sick leave is for COVID-19-related issues. There are six designated justifications for an employee using the leave and they have differing pay requirements as indicated below:
• The employee is subject to a federal, state, or local quarantine or isolation order for Coronavirus – paid at the regular rate of pay capped at $511 per day and/or $5,110 in the aggregate;
• The employee is advised by a health care provider to self-quarantine due to Coronavirus concerns – paid at the regular rate of pay capped at $511 per day and/or $5,110 in the aggregate;
• The employee is experiencing symptoms of Coronavirus and seeking a medical diagnosis – paid at the regular rate of pay capped at $511 per day and/or $5,110 in the aggregate
• The employee is caring for an individual who is under a quarantine or isolation order or has been advised to self-quarantine – paid at 2/3 of the regular rate of pay and capped at $200 per day and/or $2,000 in the aggregate;
• The employee is caring for a child whose school or child care has been closed due to Coronavirus – paid at 2/3 of the regular rate of pay and capped at $200 per day and/or $2,000 in the aggregate;
The employee is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services – paid at 2/3 of the regular rate of pay and capped at $200 per day and/or $2,000 in the aggregate.
For employees that do not have a set schedule, paid sick leave is based on the average number of hours the employee was scheduled per day over the six-month period prior to the use of the leave
Because the federal paid sick leave is in addition to other statutory paid sick leave, an employer cannot incorporate it into an existing PTO policy. The additional time off must be separate. Further, the employer cannot require an employee to exhaust other forms of paid sick or PTO before utilizing the new leave.
Guidelines for calculating the amount of sick leave pay are to be provided by the Secretary of Labor within 15 days.
The ability to use this new leave ends when the qualifying event ends. It does not carry over to the next year and is not payable upon termination.
The bill ensures employees who work under a multiemployer collective agreement and whose employers pay into a multiemployer plan are provided with leave.
Employers are required to post a notice informing employees of their expanded sick leave rights. This notice is scheduled to be published within seven days.
Leave will be in place through December 31, 2020.
The Families First Coronavirus Response Act also includes a temporary expansion of the Family and Medical Leave Act (FMLA) through December 31, 2020
The expanded FMLA leave entitlement only applies to employers with fewer than 500 employees. At the time of signing, the Act does not exempt businesses with fewer than 50 employees (those normally not subject to FMLA), but the Secretary of Labor has authority to issue regulations to provide an exemption. This will be an important follow up item for employers with under 50 employees.
The expanded FMLA is specifically intended for childcare-related issues and has pay implications significantly different from the regular FMLA:
Allows FMLA leave (up to 12 weeks) to be used for a qualifying need related to a public health emergency concerning Coronavirus, as declared by federal, state, or local authorities.
A “qualifying need” is limited to circumstances where the employee is unable to work or telework due to the need to care for a child under 18 if the child’s school or childcare is closed due to a Coronavirus-related public health emergency.
Employees are eligible for the leave if they have worked for the employer for at least 30 calendar days. Note that this is a considerably wider eligibility rule that existing FMLA.
The rules for when this Coronavirus-related FMLA leave is paid versus unpaid differ greatly from existing forms of FMLA leaves, all of which are unpaid:
o If an employee takes leave to care for a child due to a Coronavirus-related school closure, the first 10 days of the leave may be unpaid. The employee may elect (but may not be required) to use accrued vacation or sick leave during this time;
o After this first 10 days, the employer must provide PAID leave of no less than 2/3 of the employee’s regular rate of pay, capped at $200 per day and $10,000 aggregate.
An employee who uses this FMLA leave is entitled to reinstatement to the same or equivalent position UNLESS the employer has fewer than 25 employees, the position held by the employee at the time the leave started no longer exists due to economic conditions or other operating condition caused by the public health emergency, and the employer has tried to restore the employee to an equivalent position. If there is no position available, the employer still must make reasonable effort for one year to contact the employee if an equivalent position becomes available.
Employers of health care providers and emergency responders may elect to exclude such employees from the provisions of this law.
Payroll Tax Credits are available to employers that provide paid sick leave or paid family leave to employees for the specific Coronavirus-related purposes defined by the Act. Employers will be entitled to a payroll tax credit for each calendar quarter in an amount equal to 100% of the qualified paid sick leave wages paid by the employer in the quarter, and the amount of qualified family leave wages paid by the employer, not to exceed $200 per day and $10,000 aggregate per employee.
The Act also provides for $1 billion in 2020 for emergency grants to states for activities related to unemployment insurance benefits.
The Act requires private health plans, Medicare, Medicaid, CHIP, TRICARE, Coverage for Veterans and Coverage for Federal Civilians to provide coverage at no cost sharing for COVID-19 testing and additionally provides for reimbursement by the National Disaster Medical System to reimburse testing costs for uninsured individuals. American Indians and Alaskan Natives are also entitled to testing without cost sharing including when sent for care away from the tribal health care facility.
The information presented in this email is provided for informational purposes only and does not constitute as legal advice.
Filed Under: Labor & Employment
“Under the ABC test, a worker is presumed to be an employee, unless the hiring entity establishes each of the following:
“(A) that the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; and
(B) that the worker performs work that is outside the usual course of the hiring entity’s business; and
(C) that the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.” (Dynamex, supra, 4 Cal.5th at p. 957.)”
Garcia v. Border Transportation Group, LLC (2018) 28 Cal.App.5th 558, 569.
A plumber hired by a retail store would not be considered an employee; by contrast, a cake decorator servicing a bakery for custom cakes, or an at-home seamstress sewing dresses from patterns supplied by a clothing manufacturer, would. (Id. at pp. 959–960.) Garcia, supra, 28 Cal.App.5th 558, 569-570.
Because “a hiring entity’s failure to satisfy any one of the three parts itself establishes that the worker should be treated as an employee for purposes of the wage order, a court is free to consider the separate parts of the ABC standard in whatever order it chooses.” (Dynamex, supra, 4 Cal.5th at p. 963.) Garcia v. Border Transportation Group, LLC, supra, 28 Cal.App.5th 558, 569.
Dynamex applies to wage order claims. Dynamex did not purport to replace the Borello standard in every instance where a worker must be classified as either an independent contractor or an employee for purposes of enforcing California’s labor protections. Garcia v. Border Transportation Group, LLC, supra, 28 Cal.App.5th 558, 570.
“The [Dynamex] court cites with approval a Utah case that explained, “‘the appropriate inquiry under part (C) is whether the person engaged in covered employment actually has such an independent business, occupation, or profession, not whether he or she could have one.’” (Dynamex, supra, 4 Cal.5th at p. 962, fn. 30, quoting McGuire v. Department of Employment Security (Utah Ct.App. 1989) 768 P.2d 985, 988. .)” Garcia v. Border Transportation Group, LLC (2018) 28 Cal.App.5th 558, 573. the third prong, it is not enough to show that the individuals are free to engage in similar activities for others or work as employees for others.” Garcia, supra, at 573.
New Labor Code 2750.3
The ABC test has been codified in the new Labor Code § 2750.3 which is effective January 1, 2020. Labor Code § 2750.3(a) states, inter alia:
“(1) For purposes of the provisions of this code and the Unemployment Insurance Code, and for the wage orders of the Industrial Welfare Commission, a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:
(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
(B) The person performs work that is outside the usual course of the hiring entity’s business.
(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.”
New Labor Code 2750.3 also lists occupations that are exempt.
“(b) Subdivision (a) and the holding in Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex), do not apply to the following occupations as defined in the paragraphs below, and instead, the determination of employee or independent contractor status for individuals in those occupations shall be governed by Borello.
(1) A person or organization who is licensed by the Department of Insurance pursuant to Chapter 5 (commencing with Section 1621), Chapter 6 (commencing with Section 1760), or Chapter 8
(commencing with Section 1831) of Part 2 of Division 1 of the Insurance Code.
(2) A physician and surgeon, dentist, podiatrist, psychologist, or veterinarian licensed by the State of California pursuant to Division 2 (commencing with Section 500) of the Business and Professions Code, performing professional or medical services provided to or by a health care entity, including an entity organized as a sole proprietorship, partnership, or professional corporation as defined in Section
(3) An individual who holds an active license from the State of California and is practicing one of the following recognized professions: lawyer, architect, engineer, private investigator, or accountant.
4) A securities broker-dealer or investment adviser or their agents and representatives that are registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed by the State of California under Chapter 2 (commencing with Section 25210) or Chapter 3 (commencing with Section 25230) of Division 1 of Part 3 of Title 4 of the Corporations Code.
(5) A direct sales salesperson as described in Section 650 of the Unemployment Insurance Code, so long as the conditions for exclusion from employment under that section are met.
(6) A commercial fisherman working on an American vessel as defined in subparagraph (A) below.
(1) Subdivision (a) and the holding in Dynamex do not apply to a contract for “professional services” as defined below, and instead the determination of whether the individual is an employee or independent contractor shall be governed by Borello if the hiring entity demonstrates that all of the following factors are satisfied:
(A) The individual maintains a business location, which may include the individual’s residence, that is separate from the hiring entity. Nothing in this subdivision prohibits an individual from choosing to perform services at the location of the hiring entity.
(B) If work is performed more than six months after the effective date of this section, the individual has a business license, in addition to any required professional licenses or permits for the individual to practice in their profession.
(C) The individual has the ability to set or negotiate their own rates for the services performed.
(D) Outside of project completion dates and reasonable business hours, the individual has the ability to set the individual’s own hours.
(E) The individual is customarily engaged in the same type of work performed under contract with another hiring entity or holds themselves out to other potential customers as available to perform the same type of work.
(F) The individual customarily and regularly exercises discretion and independent judgment in the performance of the services.
(2) For purposes of this subdivision:
(B) “Professional services” means services that meet any of the following:
(ix) Services provided by a still photographer or photojournalist who do not license content submissions to the putative employer more than 35 times per year….. For purposes of this clause a “submission” is one or more items or forms of content produced by a still photographer or photojournalist that: (I) pertains to a specific event or specific subject; (II) is provided for in a contract that defines the scope of the work; and (III) is accepted by and licensed to the publication or stock photography company and published or posted. Nothing in this section shall prevent a photographer or artist from displaying their work product for sale.”
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