“Get your facts first, then you can distort them as you please.”- Mark Twain
In the last few weeks there has been news about court decisions and laws that may have an impact in your small business. Starting June we have had the Labor Commission’s decision about UBER and one of its drivers; FedEx’s $228 Million settlement for misclassifying workers as independent contractors; the State of California’s legislature passing a bill (AB202) to provide cheerleaders with all the rights and benefits under labor law (minimum wage, employment, unemployment and discrimination laws); the president’s Obama proposal to overhaul FLSA overtime rules; the California sick leave law that went into effect July 1 and just a couple days ago, we got hit with the news about the California legislature plan to raise the minimum wage to $11 in 2016. What these news mean to your small business?
What it means is that you need to review your employee manuals, job descriptions, internal policies and procedures to avoid the mistakes these big companies made. When it comes to independent contractors, beware! The law does not have a set definition of the term “independent contractor” and the enforcement agencies always start with the presumption that the worker is your employee! Also, no matter if you have a written agreement establishing an independent contractor relationship, this is not determinative and the fact that you issue a 1099 form rather than a W-2 form is also not determinative with respect to independent contractor status.
When it comes to overtime, in California, you’ll have to pay it if your employee works more than eight hours in any workday or more than 40 hours in any workweek. Your small business will have to pay the overtime even if this has not been authorized! However, you can discipline an employee if he or she violates your company’s policy of working overtime without the required authorization. There are some exceptions to the overtime rules, if your employees meet the test for exempt status as defined by federal and state laws, or unless they are specifically exempted from overtime by the provisions of one of the Industrial Welfare Commission Wage Orders regulating wages, hours and working conditions
When it comes to the new paid sick leave law remember that employees earn at least one hour of paid leave for every 30 hours worked. For an employee that works full time it’s a little more than eight days a year. Your company can limit the amount of paid sick leave you can take in one year to three days (or 24 hours). Your company must show, on the employee’s pay stub, how many days of sick leave they have available. You also must keep records showing how many hours the employee has earned and used for three years.
All this news can be summarized in one word: compliance. How small businesses can comply with the law? Regardless if the issue is independent contractors, overtime, sick leave or minimum wage, make sure you go back to basics: review the law and read by yourself what it says. Do not relay on what others are saying! It is important for you, small business owner, to have a basic understanding of the law. The enforcement agencies always start with the presumption that the worker is right; thus, you must keep your employee records and never let the guard down!