Mon, April 21, 2014

2013 & 2014 California Labor Law and HR Updates

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2013 & 2014 California Labor Law and HR Updates

CLICK HERE FOR NEW 2014 CALIFORNIA LABOR LAWS

Over the past year, dozens of new California labor laws and legislative bills were passed, effective on January 1, 2013. Many other changes affecting employers nationwide went into effect on such as payroll tax limits, workers’ compensation insurance, federal employment regulations, and most significantly, the Patient Protection and Affordable Care Act, otherwise known as Health Care Reform.

Click here to listen to our archived “2013 California Employment Updates” webinar.

View supplemental webinar materials here.

2013 California HR Updates Report

In our annual HR report, we cover the following important topics:

  • 2013 California Labor & Employment Law Updates
  • Health Care Reform in 2013
  • Other PPACA Updates
  • Workers’ Compensation Reform
  • California Workers’ Compensation Insurance Rates on the Rise
  • Employee Training & Development
  • Payroll & Taxes – 2013 Updates

2013 CALIFORNIA EMPLOYMENT & LABOR LAW UPDATES

The California legislative session ended on September 30, with Governor Jerry Brown signing many new bills into law. While some of these employment laws break new ground, most are extensions or expansions of existing legislation. They are effective as of January 1, 2013. Below is a brief summary of ten new bills signed into law by the Governor:

  • AB 1775Wage Garnishments: Exempt Earnings. Increases the amount of wages protected from garnishment. Under existing law, the maximum amount of wages exempt from garnishment was the lesser of 25% of an individual’s weekly disposable earnings or 30 times the federal minimum hourly wage (i.e. 30 x $7.25). Under the new law, the maximum amount of wages exempt from garnishment will be the lesser of 25% of an individual’s weekly disposable earnings or 40 times the California minimum wage (40 x $8.00).
  • AB 1844 - Social Media Password Restrictions. Prohibits an employer from requiring or requesting an employee or applicant for employment to disclose a username or password for the purpose of accessing personal social media, to access personal social media in the presence of the employer, or to divulge any personal social media.
  • AB 1964 - Protection of Religious Dress and Behavior. An extension of the Fair Employment and Housing Act (FEHA), this bill includes religious dress or religious grooming practices as a belief or observance covered by the protections against religious discrimination. It specifies an accommodation of an individual’s religious dress or grooming practice that would require that person to be segregated from other employees is not considered a reasonable accommodation.
  • AB 2103 - Wage and Hour Overtime Laws. Prohibits paying a salary to non-exempt employees that includes compensation for overtime hours (this law was designed to overturn a 2011 court decision).
  • AB 2386 – Breastfeeding in the Workplace. This law amends the California Fair Employment and Housing Act to provide that the term “sex” includes breastfeeding or medical conditions related to breastfeeding an affords additional legal protections to women engaging in these activities.
  • AB 2396 - Employment of infants in the entertainment industry. This bill extends the current law which restricts the employment of infants in the entertainment industry, by requiring the completion and submission of a medical certification and approval before a temporary permit for the employment of the infant may be issued.
  • AB 2674 – Inspection of Employee Files. Under this expansion of the existing law, both current and former employees must be granted access to their employee files, employers must develop and provide written request forms upon the verbal request of an employee to view their files, and employers must provide copies to the employee within 30 days of the request, or face a penalty.
  • AB-2675Employment Contract Requirements. Employment contracts involving commissions as a method of payment must (1) be in writing; (2) set forth the method by which the commissions are required to be computed and paid; and (3) contain a singed receipt for the contract from each employee. AB 2675 clarifies that the term “commissions” does not include short-term productivity bonuses, temporary variable incentive payments that increase but do not decrease payment under the written contract, or bonus and profit-sharing plans, unless the employer has offered to pay a fixed percentage of sales or profits as compensation for work to be performed.
  • SB 1193 – Human Trafficking. This bill will require specified employers to post a notice that contains information related to slavery and human trafficking in a conspicuous area, readily visible to employees and the public.
  • SB 1255 – Itemized Wage Statements. This law restores and clarifies the itemized wage statement requirements of the Labor Code after several court decisions weakened the statute’s worker protections. This bill provides that an employee is deemed to suffer injury and is entitled to monetary compensation if the employer fails to provide accurate and complete information and the employee cannot promptly and easily determine from the wage statement alone all of the information required by the statute.
  • AB 1845Unemployment insurance: Overpayment and Penalties. This bill would provide that an employer’s reserve account is not relieved of charges relating to a benefit overpayment established on or after October 22, 2013, if the Employment Development Department determines that the payment was made because the employer, or an agent of the employer, was at fault for failing to respond timely or adequately to requests of the Department for information relating to the individual claim for unemployment compensation benefits.
  • AB 2370 & SB 1381 – Intellectual Disabilities. The term “Intellectual disability” will replace the outdated term “mental retardation” in statutes and regulations that contain this term.
  • SB 1038 – FEHC Duties Transferred to DFEH. This bill eliminates the California Fair Employment and Housing Commission (FEHC) and transfers the administrative hearing process and civil actions filed on behalf of a complainant directly to the Department of Fair Employment and Housing (DFEH). The biggest change is that the DFEH will now be able to bring complaints directly to court and require mandatory dispute resolution.

Health Care Reform in 2013

With over 2500 pages and some 450 provisions, the Patient Protection and Affordable Care Act (PPACA, or Health Care Reform) is one of the most complex pieces of legislation ever signed into law. The Act touches every sector – from individual citizens, to small businesses, to large corporations, to the Federal government itself.

With the re-election of Barack Obama and the 2012 Supreme Court Decision to uphold the constitutionality of the law, employers must now focus on understanding the legislation and the financial impact on their business. Below is a brief outline of some key points relating to the monetary obligations and risks of Health Care Reform.

1. What is a Health Benefit Exchange?

Each state is charged with establishing, as a governmental agency or nonprofit entity, an American Health Benefit Exchange. These Exchanges have two functions:

  1. To facilitate the purchase of qualified health plans
  2. To provide for the establishment of a Small Business Health

Options Program (referred to as a “SHOP Exchange”). A SHOP Exchange will assist employers in enrolling employees in small group qualified health benefits plans. States may establish a single Exchange that performs both functions, or create separate Exchanges.

Grants will be made available to states by the Department of Health and Human Services (HHS) for planning and establishing an Exchange. However, by 2015, Exchanges must be self-sustaining and may generate revenue through assessments or fees. If a state chooses not to establish an exchange, the Federal government will set up federal health insurance exchanges.

2. What are the penalties for employers who do not offer coverage?

Beginning in 2014, an employer with 50 or more full-time equivalent employees during the preceding calendar year, will be penalized if any of their full-time employees are not offered coverage (and obtains a premium credit through the exchange).  In 2014, the monthly penalty per employee will be equal to the number of full-time employees, minus 30, multiplied by $166.66 ($2,000 per year, divided by 12) for any applicable month.

The amount of the penalty will increase in subsequent years.

EXAMPLE: An employer with 80 employees will be subject to a penalty of $8333 per month

(80-30 = 50 X $166.66).

3. Could an employer who does offer coverage still be subject to penalties?

Even in some circumstances, employers with 51 or more full-time equivalent employees that offer insurance may still be subject to a penalty.

This applies when the employer’s plan does not meet PPACA’s definition of “affordable”, or if the employer’s plan pays for less than 60% of the covered expenses.  If an eligible employee then obtains a premium credit in an exchange plan, the employer is subject to a penalty.

4. What are the individual penalties?

Beginning in 2014, PPACA requires individuals to maintain health insurance, with some exceptions.  Most individuals will be required to maintain minimum essential coverage.  Those who do not comply, and who are not exempt, will be required to pay a penalty per individual and tax dependent equal to the greater of the following:

$95 or 1.0% of adjusted income in 2014

$325 or 2.0% of adjusted income in 2015

$695 or 2.5% of adjusted income in 2016

These are just a few of the common questions related to Health Care Reform. For a more thorough analysis, please visit our dedicated PPACA webpage at http://bit.ly/health-care-reform-info.

Other PPACA Updates

Several important health care reform laws go into effect in 2013. Here are a few highlights:

1. Women’s Health Coverage Expansion

Effective for plan years beginning on or after 8/1/12, this provision expands the list of preventive coverage’s that must be offered to women at no cost to the insured. The list includes well-woman visits, gestational diabetes screening, HPV DNA testing, sexually transmitted infections counseling, HIV screening and counseling, contraception and contraceptive counseling, breastfeeding support, and domestic violence screening.

2. Flexible Spending Account Limit (FSA)

Effective for plan years beginning on or after 1/1/13, this provision limits the annual amount that can be contributed to an FSA for medical expense to $2,500.

3. Medical Care Cost Reporting on W2

This requirement is for the tax year ending 2012 for W2’s issued by 1/31/13 and applies to businesses who issued over 250 W2’s in 2011. Both employee and employer medical care contributions amounts will be reported as required on the W2.

4. Medicare Payroll Tax Increase

Effective 1/1/13, this provision imposes an additional 0.9% Medicare hospital insurance tax (HI tax) on self-employed individuals and employees with respect to earnings and wages received during the year above 200k for individuals and above 250k for joint filers (not indexed).  This provision does not change the employer side of the HI tax obligations.    In addition there will be a new 3.8% Medicare contribution tax on certain unearned income from individuals over 200k (250k for joint).

5. Employer Notice Requirement regarding Exchanges and Premium Subsidy

This provision requires employers to provide a notice informing employees of the availability of state health care exchanges and premium subsidy.

6. State Notification to HHS Regarding Exchanges

States must submit a response to the Department of Health & Human Services (HHS) by December 14, 2012 if they wish to operate a state-based exchange or partnership exchange.

Workers’ Compensation Reform

In September, 2012, Governor Jerry Brown signed a new bill (SB 863) into law, overhauling the California workers’ compensation system. The purpose of the bill was to increase workers’ comp benefits for injured employees by generating savings through various changes to the workers’ compensation system. Most of these changes will likely reduce the number of lawsuits filed over treatment and compensation.

Following months of private negotiations between employers and labor union representatives, the legislation received strong bipartisan support, passing the Assembly with a 66-4 vote, the Senate, 34-4.

The general thrust of SB 863 changes California’s system for treating and compensating injured workers. Some key elements include:

  • An increase of permanent disability benefits by $740 million, or an average increase of approximately 30 percent;
  • Creates a $120 million program for workers injured who cannot go back to a job at their previous wage level;
  • Provides cuts and dramatic reductions in medical costs and administrative procedures;
  • Limits the circumstances where lawsuits can be filled against the employers and insurance companies.

The measure was praised by California businesses due to the prospect of easing a potential 18% increase in workers’ compensation insurance costs in the following year. The State Compensation Insurance Fund (SCIF) had stated it would reduce employers’ premiums should the legislation be enacted.

“These significant reforms save hundreds of millions of dollars for California’s employers while preventing an imminent crisis of skyrocketing rates that would have hurt both injured workers and businesses,” Brown said in a statement. “It’s extraordinary to see Republicans and Democrats come together to solve a problem before it becomes a crisis.”

The only opposition to the bill stemmed from lawyers who represent injured workers and some medical care and rehabilitation groups.

California Workers’ Compensation Insurance Rates on the Rise

In October, 2012, the California WCIRB (Workers’ Compensation Insurance Rating Bureau) voted to reflect a 0% increase to their January 1, 2013 rate filing. The Bureau’s actuarial staff had originally recommended 12.6% increase, but then reduced it to a 9.2% increase to reflect the impact of SB 863.

Pressure by State Compensation Insurance Fund (SCIF) President Tom Rowe not to increase rates at all resulted in a close 6-5 vote in favor against publishing any increases. Rowe reasoned that filing for 0% would put the right kind of pressure on the workers’ compensation system to ensure that the upcoming regulations experience all the savings that were intended by the creators of the legislation.

However, a contentious hearing was held in mid-November between the WCIRB and California’s Insurance Commissioner Dave Jones. In the meeting, Jones questioned the Bureau’s decision to recommend no increase in premiums when all actuarial data indicated that an increase was necessary. In the end, the governing board members took just 45 minutes to overturn the zero-increase decision. Commissioner Jones ultimately concluded on a 15.64% increase effective January 1, 2013, 3 percentage points higher than the Bureau originally recommended. It is believed that this decision is the first time in California’s history that a Commissioner increased rates more than what the industry officially requested.

What it means to California employers

These increases come at a difficult time for California employers. While the economy and unemployment improves across the nation, California still faces an unemployment rate over 10% and some of the highest workers’ compensation insurance rates in the country. Now more than ever, state-based employers must proactively pursue best-practices in risk management and safety engineering. By conducting regular work-place inspections, ongoing safety training, and proactive claims management, employers can significantly reduce the frequency and severity of workplace injuries, ultimately leading to lower workers’ compensation costs.

While controlling state-issued insurance rates are beyond an employer’s control, managing workplace safety is not. CPEhr employs a fully staffed risk management department, managing the entire workers’ compensation process from on-site inspections and written safety procedures, to claims administration and insurance carrier negotiations. Contact us for more information how to reduce risks, and insurance costs.

 

PAYROLL AND TAXES – 2013 UPDATES

There are many updates and changes to payroll tax limits and withholding amounts in 2013. Please review the information below carefully.

FEDERAL TAXES

 

FICA (Social Security)

Maximum Taxable Earnings $113,700

($110,100 in 2012)

Employer 2013 Withholding Percent 6.2%

No change from 2012

Employee 2013 Withholding Percent 6.2%

(4.2% in 2012 for EE)

Employer 2013 Maximum Withholding $7049.40

($6,826.20 in 2012 for ER) 

Employee 2013 Maximum Withholding $7049.40

($4,624.20 in 2012 for EE)

 

FICA (Medicare)

Maximum Taxable Earnings- No Limit

No change from 2012

Employer/Employee 2013 Withholding Percentage 1.45%

No change from 2012

Employer/Employee 2013 Maximum Withholding- No Limit

No change from 2012

Additional Medicare Tax for Wages in Excess of $200,000 – Rate 0.9%, is required to be deducted by Employers

 

SUPPLEMENTAL WAGES

Rate (flat rate withholding method) 25%

Over $1 million 35%

No change from 2012

 

Federal Withholding

The 2013 federal withholding tables have not been finalized, as Congress has

not yet finalized their decision on whether to adjust the tax rates. Any

changes in the withholding tables will be communicated once they have

been announced.

 

401(k) PLAN DEFERRAL LIMITATIONS

Elective Deferrals $17,500

($500 increase from 2012)

401(k) Catch-Up Contribution Deferrals $5,500

No change from 2012

 

 

HSA PLAN DEFERRAL LIMITATIONS

Individual Maximum Contribution

(Includes Employer Contribution) $3,250

(up $150 from 2012)

Family Maximum Contribution

(Includes Employer Contribution) $6,450

(up $200 from 2012)

Catch Up Contributions (55+ years old) $1,000

No change from 2012

 

 

CALIFORNIA TAXES

 

SUPPLEMENTAL WAGE WITHHOLDINGS

Bonuses & Earnings from Stock Options 10.23%

No change from 2012

Other Supplemental Earnings 6.60%

No change from 2012

 

DISABILITY INSURANCE (Employee Paid)

Maximum 2013 Wages Subject to Withholding $100,880

(up $5,295 from 2012)

Employee 2012 Withholding Percentage 1.0%

No change from 2012

Employee 2012 Maximum Deduction  $1008.80

(up $52.95 from 2012)

TRAINING AND DEVELOPMENT

With health care, employment law and insurance guidelines changing so rapidly, employers must take a proactive stance to understand these changes and how they will impact their business. CPEhr is proud to offer a complimentary webinar series covering a wide range of Human Resources, Safety, Insurance and Health Care topics, delivered by experienced experts and trainers. We invite you to join our next webinar! Details and registration can be found at www.cpehr.com/webinar-registration.

 

2013 Training Schedule

TOPIC

DATE

Future of Health Care Reform

 Thursday, January 17

Employment and Labor Law: 2013 Updates

 Thursday, February 14

Basics of Harassment Training in California

Thursday, March 28

Substance Abuse in the Workplace

Thursday,  April 25

Documentation & Recordkeeping

Thursday, May 30

Assessing the Skill Level of your Managers

Thursday, June 27

 Medicare 101

 Thursday July 25

 Advanced Workplace Safety

 Thursday, August 29

Basics of Legal Hiring

Thursday, September 26

How to Effectively Manage Through Change

Thursday, 10/31

How to Legally Terminate

Thursday, 11/28

 

PAYROLL AND TAXES – 2013 UPDATES

There are many updates and changes to payroll tax limits and withholding amounts in 2013. Please review the information below carefully.

FEDERAL TAXES

 

FICA (Social Security)

Maximum Taxable Earnings $113,700

($110,100 in 2012)

Employer 2013 Withholding Percent 6.2%

No change from 2012

Employee 2013 Withholding Percent 6.2%

(4.2% in 2012 for EE)

Employer 2013 Maximum Withholding $7049.40

($6,826.20 in 2012 for ER) 

Employee 2013 Maximum Withholding $7049.40

($4,624.20 in 2012 for EE)

 

FICA (Medicare)

Maximum Taxable Earnings- No Limit

No change from 2012

Employer/Employee 2013 Withholding Percentage 1.45%

No change from 2012

Employer/Employee 2013 Maximum Withholding- No Limit

No change from 2012

Additional Medicare Tax for Wages in Excess of $200,000 – Rate 0.9%, is required to be deducted by Employers

 

SUPPLEMENTAL WAGES

Rate (flat rate withholding method) 25%

Over $1 million 35%

No change from 2012

 

Federal Withholding

The 2013 federal withholding tables have not been finalized, as Congress has

not yet finalized their decision on whether to adjust the tax rates. Any

changes in the withholding tables will be communicated once they have

been announced.

 

401(k) PLAN DEFERRAL LIMITATIONS

Elective Deferrals $17,500

($500 increase from 2012)

401(k) Catch-Up Contribution Deferrals $5,500

No change from 2012

 

 

HSA PLAN DEFERRAL LIMITATIONS

Individual Maximum Contribution

(Includes Employer Contribution) $3,250

(up $150 from 2012)

Family Maximum Contribution

(Includes Employer Contribution) $6,450

(up $200 from 2012)

Catch Up Contributions (55+ years old) $1,000

No change from 2012

 

 

CALIFORNIA TAXES

 

SUPPLEMENTAL WAGE WITHHOLDINGS

Bonuses & Earnings from Stock Options 10.23%

No change from 2012

Other Supplemental Earnings 6.60%

No change from 2012

 

DISABILITY INSURANCE (Employee Paid)

Maximum 2013 Wages Subject to Withholding $100,880

(up $5,295 from 2012)

Employee 2012 Withholding Percentage 1.0%

No change from 2012

Employee 2012 Maximum Deduction  $1008.80

(up $52.95 from 2012)