California June 2019 HR Regulatory Updates

on June 14, 2019
This blog post covers timely state legislative employment updates. Check out what you need to know and gain compliance tips to help you stay on top of HR, the right way.


California

Independent Contractor Test Must Be Retroactively Applied

Who: Businesses that employ California based contractors or freelancers

When: Effective Immediately

What:

Following a decision of the 9th U.S. Circuit Court of Appeals, businesses are now liable for determining whether California workers are employees or independent contractors using an “ABC” test. The test must be applied to workers hired before April 2018.

The ruling states that employers must prove a worker is an independent contractor based on three conditions:

  1. The contractor’s work performance is independent of the employer.
  2. The contractor performs work outside of the employer’s “usual business.”
  3. The contractor conducts an independent business, doing the same type of work that is being done for the employer.

The contractor is an employee under California’s wage orders if no elements are met. The employee is entitled to minimum wage, overtime, rest/meal breaks, and other requirements.

How:

Review all 1099 employees and determine whether they meet the “ABC” test.

Additional Resource:

U.S. Court of Appeals for the Ninth Circuit, U.S. District Court for the Northern District of California

Retirement Savings Program

Who: California employers with 5+ employees that don’t offer a retirement savings program 

When: Registration opens July 1, 2019. Deadlines vary by business size:

  • 100+ employees: June 30, 2020
  • 50-100 employees: June 30, 2021
  • 5-49 employees: June 30, 2022

What:

Employers with 5+ employees, who don’t already offer a retirement savings program, will be required to offer a plan from the private market or provide access to the CalSavers Retirement Savings Program.

Employers are meant to be a pass-through for access to the CalSavers Program and not responsible for making contributions to the individual retirement accounts. The program is funded by an automatic 5% payroll deduction. Employers will be required to automatically deduct contributions from employee paychecks and send payroll contributions to the program.

How:

  • Determine if your business must meet the new requirements and the date of your enrollment deadline.
  • Review your current retirement savings program and determine if you need to make changes.
  • If you don’t have a program but are required to offer an option, conduct a business assessment on which option best suits your needs, how you will communicate and implement the changes with payroll and your employees.

Additional Resources:

CalSavers Program

California Secure Choice Retirement Savings Notice of Regulatory Action

Emily Hartman

Emily Hartman

Emily is the Client Content Specialist. She’s using the skills she learned in Washington, D.C. to breakdown technical information into news you can use.

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Emily HartmanCalifornia June 2019 HR Regulatory Updates