05.09.18

May 2018 HR Bulletin: Will Your Independent Contractors Pass the ABC Test?

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May 2018 HR Bulletin

Will Your Independent Contractors Pass the ABC Test?

May 2018 HR Bulletin

On April 30, 2018, the California Supreme Court issued an opinion that could have significant impact on a business’s ability to hire workers as “independent contractors.” The case, Dynamex Operations West, Inc. v. Superior Court of Los Angeles, tackled the question of whether a nationwide delivery company had misclassified delivery drivers as independent contractors, unlawfully avoiding responsibility for overtime and other wage and hour protections.

In its decision, the Supreme Court adopted a more structured process than the multi factor approach used in the past, referred  to as the “ABC test” for distinguishing employees from independent contractors.

The ABC test begins with the presumption that all workers are employees and are covered by the protections of the Fair Labor Standards Act and applicable IWC Wage Order(s). A person may be classified as an independent contractor only if ALL of the following conditions are met:

A)     Is the worker free from the control and direction of the company in connection with the performance of the work, both in contract and in fact?  Even a very minimal amount of control over the work product may be sufficient to fail this part of the test. In a 2007 Vermont case, a clothing manufacturer failed to establish that independent knitters were free from the company’s control even though they worked from home, on their own machines, and at days/hours of their own choosing. (Fleece on Earth v. Dep’t of Emple. & Training)

B)     Does the worker perform work that is outside the usual course of the hiring entity’s business? As examples, the Court contrasted a retail store hiring a plumber or electrician with a bakery hiring a decorator to work on custom-designed cakes. When the work being performed is comparable to that of employees, and the individual would normally be viewed by others as working in the hiring entity’s business, the relationship will likely fail this part of the test.

C)     Is the worker customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed? In other words, does the person actually have his/her own business with associated licensing, advertising, etc. or is he/she simply an individual who agreed to forego the typical employer/employee relationship? The fact that a business does not prohibit a worker from engaging in such activities is not enough. For example, in a 1998 Virginia case, a construction company failed to prove that siding installers were independent contractors partially because “no evidence was presented that the installers had business cards, business licenses, business phones, or business locations.” (Brothers Const. Co. v. Virginia Empl. Comm’n)

Keeping in mind that all three factors of the ABC test must be satisfied in order to correctly classify a worker as an independent contractor, the somewhat-vague Part A regarding company control may not need to be analyzed at all. In its decision, the Supreme Court stated, “a court is free to consider the separate parts of the ABC standard in whatever order it chooses…. In many cases it may be easier and clearer for a court to determine whether or not Part B or Part C of the ABC standard has been satisfied than for a court to resolve questions regarding the nature or degree of a worker’s freedom from the hiring entity’s control.” This means that even if your business makes a concerted effort to be hands-off regarding how or when a worker gets the job done, if the person is performing work that is not distinctly different from your business, or if the worker has not established his/her own independent trade or occupation, the classification of independent contractor may be found unlawful.

If your company currently utilizes independent contractors, we encourage you to carefully examine the types of projects and assignments these workers are given. Would their work be perceived as being “in the usual course” of your business? Also consider whether each person is operating a truly independent trade or business, with the license and company structure to show for it. If you are not confident that these working relationships would pass the ABC test, you may wish to seek legal guidance to assess risk and determine next steps.


12.22.17

December 2017 HR Bulletin

HR Bulletin

December 2017 HR Bulletin

Just When You Thought You’d Seen It All…

December 2017 HR Bulletin

As HR professionals, we see the good, the bad, the ugly… and the downright hilarious. Our Consultants are often asked, “Do other companies have these kinds of issues?” As 2017 comes to a close, below are a few stories to make you smile and remind you that you’re not alone!

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A retail company was hiring for front-line customer service positions paid between $8-10 an hour. A well-dressed middle-aged man came in with a briefcase, a leather satchel, and his laptop. The interviewer reported the following conversation: During the interview, he started by telling me that I shouldn’t even start talking unless I was prepared to match his current job’s $60,000 salary. I reminded him that these jobs were entry-level jobs that paid accordingly and he told me that I had five minutes to “Wow” him into accepting a job. I give him a cursory rundown of the job and he let me know that he’ll settle for $45,000 in salary, but he can only work 7am-4pm because that’s when his mom is available to drop him off and pick him up. In an effort to conclude the interview, I let him know that we would keep his information on file. He stopped me and said he’ll take an entry level job if I let him use my phone to call his mom to come pick him up.

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An employment application received by Sierra HR listed a former position as “Self Employed: Marijuana Dealer.” (The candidate was not contacted for an interview.)

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An employee claimed that her supervisor was creating a hostile work environment by repeatedly asking her out when she wasn’t interested. She reported this claim to Human Resources. When HR investigated her complaint, the supervisor was dumb-struck and said he never asked her out, would never ask out a direct report, and rarely even had a conversation with her. After talking to all possible witnesses in the department, no one had ever seen or heard of any personal interaction between the supervisor and the employee. While reporting the preliminary findings to the employee, she disclosed that she was certain of his interest in her because she ‘had an extra brain cell’ that allowed her to ‘read his mind’. She knew in her mind that he was asking her out. How do you handle mental-telepathy harassment?!

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Sierra HR Partners was asked to conduct exit interviews and separation procedures for a client whose business was closing. Employees’ final workdays were pre-determined as each department wrapped up operations, and exit meetings were planned every week for approximately two months. Staff became accustomed to seeing our Consultant enter the building with a stack of paperwork to be completed, and the announcement to other employees quickly became a source of amusement for everyone: “The Terminator is here for you!”

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A supervisor at a newspaper called the HR department because an employee’s mother showed up with the employee for his performance review. She said she felt it was just like a ‘parent-teacher’ conference, and that her help would probably be needed to make sure her son met work standards. The son was 22.

Want to read our full newsletter?  Become an HR Business Partner and receive our monthly updates by email.

As an HR Business Partner, you receive:

• Unlimited phone consultation by certified HR consultants Monday through Friday, 8 a.m. – 5:30 p.m.

• Free monthly legal seminars for designated representative

• Breaking employment news & best practices

• Discounted project rates

• Peace of mind


11.16.17

November HR Bulletin: Are Your Pay Ranges Ready for 2018?

HR Bulletin

As you know, Senate Bill 3 (passed in 2016) gradually raises California’s minimum wage on an annual basis. Which means that in addition to planning your office holiday party, ‘tis also the season to audit your employees’ pay rates to ensure legal compliance. (Who says HR people are dull?)

Effective January 1, 2018 the minimum hourly wage for employers of 25 or fewer employees will be $10.50 per hour. If your company employs 26 or more employees, the minimum hourly rate will be $11.00 per hour. In California, an exempt salaried employee must be paid at least two times the minimum wage for a 40-hour workweek, making the minimum annual salary $43,680 for employers of 25 or fewer, and $45,760 for employers of 26 or more.

The Department of Industrial Relations has also announced changes to the minimum wage rates for employees who are classified as exempt computer software professionals or licensed physicians and surgeons.

Since you’re already foregoing the eggnog so you can examine pay rates, now is a good time to review your company’s wage range for each position, or to create them if you do not currently have formal ranges. In addition to supporting equitable hiring and pay practices, formal wage ranges are necessary for compliance with Assembly Bill 168 (signed by the Governor in October.) This bill prohibits an employer from inquiring about an applicant’s salary history, and from relying on past salary history when deciding on a pay rate to offer. It also requires employers to provide the pay scale for a position to an applicant applying for employment. Failing to comply with a reasonable request would be deemed a misdemeanor.

November HR BulletinEstablishing new pay ranges can be a time consuming process, and Sierra HR Partners is available to assist with best-practice steps and labor market research.

Want to read the full newsletter?  Become an HR Business Partner and receive our monthly updates by email.

As an HR Business Partner, you receive:

• Unlimited phone consultation by certified HR consultants Monday through Friday, 8 a.m. – 5:30 p.m.

• Free monthly legal seminars for designated representative

• Breaking employment news & best practices

• Discounted project rates

• Peace of mind


11.14.17

Supporting Our Community this Holiday Season

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Sierra HR Partners has selected a worthwhile cause to help support our community during the holiday season. We’re supporting a local agency that cares for families in our Community year-round – the Ronald McDonald House of Central California.

Located adjacent to Valley Children’s Hospital, this 22,000 sq. ft. House is a refuge for families with children receiving treatment. Being together as a family is never more important than around the holidays.  Join us in donating items needed for the House listed below. Or if you prefer, you may donate directly to the Ronald McDonald House through their website.

  • Golf Cart (4-6 seats) – or financial contribution
  • Bellhop Cart (hotel baggage cart)
  • Electric Mixers (handheld or Kitchen-Aid)
  • Portable Standing Fans
  • Hair Blow dryers
  • Wheel chairs
  • Irons
  • Ironing Boards
  • Corelle Brand Dishware (white)

The deadline for participation is December 8, 2017.

For questions about participation, e-mail our office manager, Kayla Thomas.


10.27.17

Conviction History and Salary History

HR NEWS

Conviction History and Salary History           

AB 1008 was signed into law by Governor Brown last week, which imposes greater restrictions on an employer’s ability to question an applicant’s conviction history – prior to a conditional job offer being extended. Effective January 1, 2018, it will be an unlawful employment practice for any employer with five or more employees to do any of the following:

1. To include on any application for employment, before the employer makes a conditional offer of employment to the applicant, any question that seeks the disclosure of an applicant’s conviction history.

2. To inquire into or consider the conviction history of the applicant, until after the employer has made a conditional offer of employment to the applicant.

For more information, please read AB 1008.

Governor Brown also signed into law AB 168, which adds section 432.3 to the CA Labor Code that prohibits employers from considering an applicant’s salary history when deciding whether to hire him/her or when determining what compensation to offer. Employers may not seek an applicant’s salary history, whether verbally or in writing. However, the applicant may still voluntarily disclose salary information so long as it is not prompted from the employer.

For more information, please read AB 168.

What this means, is that your Employment Application form now needs to be modified to eliminate questions about an applicant’s prior convictions and salary history. If you use Sierra HR Partners for your background investigations, effective, 1/1/18, we will no longer inquire about an applicant’s salary history during the employment verification process.

If you have any questions about this new legislature, please contact our office by phone, or reach out to one of our certified consultants or Executive Director, by e-mail:

Janet Keene, PHR – keene@sierrahr.com

Dan Larsen, PHR – larsen@sierrahr.com

Brenda Budke, SPHR – budke@sierrahr.com

You can also submit inquiries through our contact page. To do so, click here.