Extra Cost of Employees

“I pay my employees well but a few are mentioning I should be reimbursing them for different things. Besides wages, am I supposed to pay them for anything else?”

Your HR Survival Tip

If you ask the Internal Revenue Service (IRS), California’s Department of Industrial Relations (DIR), the federal Department of Labor (DOL), or the Courts, you will find they all agree you may owe your employee for more than just time worked. The answer comes down to the fact that it should not cost your employee a penny to work for you or to do their job.

Where those pennies are being spent by employees depends on the job they have, equipment/tools needed to do the job, and their workspace. When using an employee’s personal property, you will be legally expected to pay for that convenience…even if it doesn’t actually cost the employee more. Examples include:

  • Personal cell phone — If you haven’t provided the employee with a desk or cell phone, you must reimburse for a percentage of their monthly plan based on company use. Even if they have an unlimited plan, your company benefits so you need to calculate a fair reimbursement. However, you won’t owe anything if they choose to use their personal cell phone over a company-provided cell phone or access to a phone at their desk.
  • Mileage — If an employee is using their personal vehicle to run errands or go to different job sites within the day, you should pay them for mileage. The simplest method is to use the IRS mileage rate because it covers everything. Mileage does not include their commute between their home and the first/last job site of the day. Also, you probably owe for their time whenever you owe them for mileage.
  • Expenses — If employees must buy supplies or equipment to do their job, you need to reimburse them. This includes things your remote employees need, such as internet service, cell phones, laptops, monitors, and office supplies. However, you aren’t obligated to buy office furniture since they should already have an office setup for remote work. You also are not required to reimburse for equipment that isn’t necessary to do the job, such as a printer.
  • Logo wear — If you require employees to wear shirts, hats, or other items of clothing with your logo, you must provide sufficient quantities to last a workweek…and reimbursement for the cleaning of those items. Yes, that’s a little-known requirement. You cannot require the employee to pay for the logo wear but may request a deposit that must be returned when the employee returns the items.

Look carefully at each position in your company to determine whether you owe reimbursements to employees in those positions. The change of the tax laws has made it more difficult for employees to claim those expenses on their income tax forms, which means they will be looking to you to make them whole. Reimbursing employees becomes critical if those expenses result in an employee making less than minimum wage in any pay period.

Upcoming Deadlines

We have a few hard deadlines ahead of us that require action. Start scheduling now to ensure everything is ready and/or done by the deadline.

By 12/31/2020 — Sexual Harassment Prevention Training

If your company has 5+ employees anywhere, including owners, all your California employees must complete their sexual harassment prevention training by 12/31 of this year. This is paid time for the employees so schedule it accordingly. We have had two years to get this training completed so it’s highly unlikely the state will accept any excuses for not meeting the deadline. There are several resources for this training available online, including our training.

On 1/1/2021 — New Minimum Wage

On January 1st, the CA minimum wage increases again for non-exempt (hourly) employees. Companies with 25 or fewer employees must pay $13/hour, while companies with 26 or more employees must pay $14/hour. These numbers will continue to increase by $1 for the next two years. Please check the law in your area because most have a higher minimum wage. For example, the city of San Diego’s minimum wage will be $14/hour on 1/1 for companies of any size.

On 1/1/2021 — New Minimum Salary

Whenever the state’s minimum wage increases, it affects the salary for exempt employees. The calculation is always the same: 2 x state minimum wage x 2080. The new absolute minimum an exempt employee can earn in 2021 is $54,080 (in companies of 25 or fewer employees) or $58,240 (in companies of 26 or more employees). This number does not allow any unpaid days off (because it’s the minimum) and cannot be reduced due to part-time hours. If the position is becoming overpriced for you, let’s talk about changing it to hourly non-exempt.

On 1/1/2021 — California Family Rights Act (CFRA)

Effective 1/1, companies with 5+ employees anywhere, including owners, will now be subject to CFRA…this has been reduced from 50+ employees. Eligible employees will be able to take up to 12 weeks of unpaid, protected time off every 12 months if they have a qualifying event. The most common qualified reasons include their own or a family member’s serious health condition or for baby bonding time. In addition to keeping the job protected, there is paperwork involved that must be provided in a timely manner. Please let us know if you’re interested in our services for this.

These are not flexible deadlines so don’t wait until the last minute to prepare. We have resources available so please inquire if you need help or have questions.

New COVID Rules

“I’ve heard my workers’ compensation insurance is now going to be hit when employees get COVID. Will this make my rates go up?”

Your HR Survival Tip

We aren’t yet sure just how SB1159 will affect workers’ compensation insurance rates, if at all. Regardless, we have no choice but to implement the changes required by this new law. Originally, there was a short-term law in place from 7/6-9/17/2020, that presumed anyone working for you might have caught COVID while working and was eligible under your workers’ comp. The new law made this presumption official and extends the time period for more than 2 years…to January 1st, 2023.

If at any time between 9/18/2020 and 1/1/2023 you can answer yes to all the below questions, you must file certain paperwork:

  • Your company has 5 or more employees (including owners, etc.).
  • An employee tested positive for COVID within 14 days of working at your facility or job site.
  • The employee provided you a positive test result.

If you did (or do in the future) answer yes to the above, provide your employee with a DWC1 workers’ comp claim form. Then ask your employee for more details so you can complete Form 5020. Now you have 3 business days to submit Form 5020 and a written report to your workers’ comp claims administrator that includes the following:

  • Employee number (do not use the employee’s name but, instead, use the last 4 of their social security number or their employee number in payroll).
  • The date the employee submitted a specimen for COVID testing.
  • Address of the location(s) the employee worked during the 14-day period prior to a positive test result.
  • The highest number of employees who also worked at each of those locations during the 45-day period before the employee stopped working at each location.

The presumption that your company might be considered responsible for an “outbreak” only occurs when, within 14 days of a positive test, (1) 4 or more employees test positive at a specific location in companies with fewer than 100 employees; -OR- (2) 4% of the highest number of employees who reported to the same specific location test position in companies with 100 or more employees; -OR- (3) your company is ordered to close by the local or state health department due to a risk of infection from COVID.

If you are committed to your safety protocols and keeping your employees safe, you may not be affected by this law. However, remind employees that their behavior outside of work can affect their safety and they should be practicing social distancing and wearing a mask even when around friends and family who don’t live with them.


“Our admin will run errands for us on occasion. I just heard she received a DUI last month. Should I have any concerns?”

Your HR Survival Tip

Yes, you should definitely be concerned. Whenever you allow an employee to drive for any reason related to their work or your company, you are taking a risk. If anything happens while an employee is driving, it’s your company that will be sued.

Companies don’t always consider someone running errands as an actual driver for the company, but you should. Even a quick, one-time run for sandwiches for the boss’ lunch is considered work time and puts the company at risk. It doesn’t matter if they are using their own vehicle or yours, it’s the activity that will count against you.

Before allowing any employee to drive on company time for any reason, you really need to do your due diligence:

  • Do you get a copy of their personal auto insurance for your files?
  • Do you get a copy of their driving record from DMV on a regular basis?
  • Do you do post-offer drug/alcohol testing?
  • Do you have a policy about driving for the company that mentions safe driving, the need to report any tickets or accidents, and other important considerations?
  • Does your company’s liability insurance policy provide you coverage for employees who are driving?
  • Do you know who is legally responsible for paying parking or traffic tickets?
  • Do you understand when a commute might be considered work time?
  • Does the employee know they could be fired if driving is a major part of their work and they are no longer considered a safe driver?

Doing your due diligence to ensure you have safe drivers is not a violation of the employee’s personal privacy. If they don’t want to provide the information you need, you don’t allow them to drive or don’t hire them into a position that will require driving. The company will always be viewed as having “deep pockets” in comparison to the employee driving so both are sued when something happens. While you can’t guarantee every employee is driving safely, you can at least show you are taking your due diligence seriously.

Over the years, there have been some interesting lawsuits about employee accidents. One lawsuit was about an employee who was responsible for taking the company mail to the post office every day on her way home…and had an accident. Another lawsuit was about an employee who attended a company happy hour and caused a fatal car accident on his way home. What might be your lawsuit story?

Employees 1, Employers 0

Governor Newsom signed SB1383 and dramatically changed protected time off as we know it. On January 1, 2021, companies of 5 or more employees will be subject to the California Family Rights Act (CFRA). The CA Chamber of Commerce had declared this a job killer bill and it definitely proves politicians don’t understand the challenges smaller employers face.

CFRA is very similar to FMLA (Federal Medical Leave Act) but includes a few more benefits for the employee than the Federal law. Starting 1/1/2021, the following differences will be in effect:

  • Affected companies:
    FMLA = companies with 50+ employees;
    CFRA = CA companies with 5+ employees.
  • Employee’s employment:
    Both = employed at least 12 months and worked at least 1,250 hours during that period.
  • Location size:
    FMLA = 50+ employees within 75 miles;
    CFRA = 5+ total anywhere.
  • Amount of time off:
    Both = up to 12 weeks of unpaid, protected time off.
  • Reasons:
    Both = care for yourself or a family member with a serious health condition, pregnancy, new baby bonding (or foster or adoption), and various military reasons.
  • Family member:
    FMLA = child (minor or a dependent), spouse, and parent;
    CFRA = those listed under FMLA plus siblings, grandparents, grandchildren, domestic partners, adult children, and children of domestic partners.
  • Protection:
    Both = the employee must be guaranteed the same or similar job when the leave ends. No exceptions.

Small employers should remember that anyone actively working in the business, even if unpaid, is counted as an employee when calculating the 5+ number. Independent contractors and non-profit volunteers are not counted.

This will be a big learning curve for those of you with less than 50 employees. There is paperwork involved with each leave and timing is critical. Even for companies of 50+, this will bring changes due to the layering of CA and Federal leaves. We will be discussing this more but please reach out to us if you want to start preparing in advance of this law going into effect.

How Unemployment Works

“I just don’t understand how unemployment works when I’m able to offer a little part-time work for employees.”

Your HR Survival Tip

We have been exposed to just about every combination of work versus unemployment this year. One of the questions we get most often is how unemployment is affected if you only give the employee a few hours each week rather than full-time work.

When a worker is on unemployment but also works part-time, they are required to report those earnings every two weeks to EDD (California’s Employment Development Department). EDD then does a calculation based on those earnings versus the worker’s unemployment benefits, based on one of two ways:

  • Method 1 — This is used when that paycheck is more than $100. The first 25% doesn’t count but the other 75% is subtracted from what the employee would have received in unemployment benefits that period.
  • Method 2 — This is used when that paycheck is $100 or less. The first $25.00 doesn’t count but the rest of the paycheck is subtracted from what the employee would have received in unemployment benefits that period.

We appear to be at the end of the Federal add-on to unemployment. However, knowing these calculation methods may help you in the future when trying to get employees back to work.

More Become Independent Contractors

If you have or were using independent contractors, you know California has complicated it over the past couple of years. The California Supreme Court established the ABC test, which made it very hard to have contractors doing anything related to customers. Then AB5 clarified certain positions could be classified as contractors. While this opened the door a bit, it’s still been hard for most companies to hire contractors and be confident with that decision.

Governor Newsom just signed AB2257, which now opens that door a bit wider. Workers that may now qualify as independent contractors include:

  • Certain occupations in connection with creating, marketing, promoting, or distributing sound recordings or musical compositions.
  • A musician or musical group for the purpose of a single-engagement live performance event, except in certain conditions.
  • An individual performance artist presenting material that is their original work, creative in character, and the result of which depends primarily on the individual’s invention, imagination, or talent.
  • Still photographer, photojournalist, videographer, or photo editor, as defined, who works under a written contract that specifies certain terms.
  • People who provide services to a digital content aggregator, as defined, by a still photographer, photojournalist, videographer, or photo editor.
  • Fine artist, freelance writer, translator, editor, content contributor, advisor, narrator, cartographer, producer, copy editor, illustrator, or newspaper cartoonist who works under a written contract that specifies certain terms.
  • People who provide underwriting inspections and other services for the insurance industry, a manufactured housing salesperson, subject to certain obligations, people engaged by an international exchange visitor program, consulting services, animal services, and competition judges with specialized skills.
  • Licensed landscape architects, specialized performers teaching master classes, registered professional foresters, real estate appraisers and home inspectors, and feedback aggregators.

AB2257 revises the conditions when business service providers providing contracted services to another business are exempt (from the ABC test). There is also an exemption for business-to-business relationships between 2 or more sole proprietors. The bill states the hiring entity need only satisfy all of the conditions of one of the exemption provisions to qualify for the exemption from the ABC Test.

However, having your profession listed above is not the only criteria. AB2257 provides us with a lot of workers who may qualify as independent contractors but there are a lot of details not listed here. At the very least, these workers must meet the usual qualifications of actually looking and acting like a true business. This means they, ideally, have a business name, business license, liability insurance, marketing collateral, and definitely more than one client. You may still want to avoid working with those people who aren’t taking their work seriously enough to create a real business out of it.

Special Updates

We often see little pieces of information that may affect you. This is just a quick summary of some of those items.

FFCRA Back to School Options

It’s possible the Families First Coronavirus Response Act (FFCRA) has more frequently asked questions (FAQs) and answers than anything we’ve seen in years. As always, the emergency Family Medical Leave (FMLA) component is available to employees who are unable to work or telework because of childcare issues. Now that schools have reopened in one format or another, more explanations were in order. The newest additions are FAQ #98, 99, and 100. Some schools now or in the upcoming months will offer in-person classes. The FFCRA monies will only be available if the school is not offering in-person classes, forcing the employee to stay home with their child due to remote learning. However, keep in mind the original qualification…the employee also cannot be able to work OR telework due to childcare issues.

FFCRA Revisions

Based on a court decision in New York, a few things have changed with how the FFCRA is generally applied by companies.

  • If someone is still officially your employee, they may be eligible for FFCRA monies even if they aren’t currently working (e.g., furloughed, sitting, or on a leave).
  • The employer can no longer deny FFCRA intermittent leave if the employee otherwise qualifies.
  • The employer may not require the receipt of documentation prior to starting to pay out FFCRA monies.
  • “Healthcare provider” now has a narrower definition so it doesn’t include non-healthcare employees, such as office employees.

Social Security Deferral

In August, President Trump signed an executive order that would allow employees who make less than $2,000 per week postpone paying their social security taxes for a few months. Immediately thereafter, the questions began. Based on the latest information from the Internal Revenue Service (IRS), it doesn’t appear that employers will be required to offer this deferral…and it seems most small employers won’t. Aside from the payroll questions arising on how to defer that social security tax, you may have another problem. If the employee leaves your company before paying back their withheld tax, you may be stuck trying to get the ex-employee to pay you back. Yes, it seems you must pay the IRS and then get reimbursed by employees.

Compensation Increased

The Bureau of Labor Statistics shows total compensation rose an average of 2.7% over a year (2.9% in salaries and 2.2% in benefits). Total compensation is a combination of all monies spent on employees for wages and all benefits.

Too Much Leave

“I have an employee on pregnancy/maternity leave but I need to call her back to work because I’m short on help right now. What are my options?”

Your HR Survival Tip


Different leaves of absence have different rules in California. Many of the differences are related to company size but pregnancy leave has very specific rules.


  • When your employee wants to stop working, she must provide you with a doctor’s note stating the date she must stop working and the expected amount of time off. This is considered the disability period because pregnancy is managed the same as other disability leaves. However, pregnancy disability is protected time off in California (meaning you must give her the same job back once she returns to work). The normal time off is 8 weeks and you cannot require your employee to work during this period or there could be legal issues.

Baby Bonding

  • Baby bonding is not always protected time off. In a company with 19 or fewer employees, the company does not have to offer any time off for baby bonding. In fact, if you do offer it, it is actually just a personal leave of absence and is not protected time off.
  • Protected time off for baby bonding is only available if your company has 20 or more employees and your employee is eligible through New Parent Leave or Family Medical Leave. Eligible employees must have been employed for at least 12 months, worked at least 1250 hours during that 12 months, AND are employed at a worksite with at least 20 or more employees within a 75-mile radius. This type of leave can be used by either parent.

A quick reminder here that Paid Family Leave is NOT a leave of absence. It’s merely a badly named plan that provides employees with supplemental pay from the state if the employee should qualify for, or you approve, another leave.

Your Choices

You have no choice about the disability leave. You have no choice about the New Parent Leave or Family Medical Leave. However, only you can approve or deny a personal leave when you have 19 or fewer employees. If your company is under 20 employees, recognize there are too many things that may change and you may need the employee back to work sooner than planned. Therefore, consider waiting to approve baby bonding time until the date is a bit closer.

Baby bonding time can be used anytime within the first year of birth so the employee doesn’t lose that benefit by accommodating you during your emergency. Admittedly, it’s much harder to cut the time short if the possibility hasn’t been discussed in advance. When approving unprotected time off, we recommend you provide the employee something in writing about their time off and retaining the right to shorten their leave (if legally possible) based on business needs. A good employer won’t abuse this right. A good employee may not be happy about changing their plans but is expected to work with you to find some middle ground.

COVID-Related Changes

“I haven’t been paying furloughed employees the emergency paid sick leave but just heard I might need to do it. Am I in trouble?”

Your HR Survival Tip

We have been subjected to ever-changing opinions and rules about COVID-19 since February…and now we have more. Most of these changes have not been backdated so you shouldn’t get in trouble for following the guidance current at that time. The latest changes include:

FFCRA for Non-Working Employees — Originally, only employees actively working were eligible to receive the FFCRA (Families First/CARES) money for emergency paid sick leave or emergency paid childcare leave. Now, anyone still in your employ may qualify for FFCRA money even if there is no available work for them (e.g., furloughed or sitting employees). Note: We don’t believe this applies to employees on a leave of absence.

FFCRA Documentation — You may not require documentation for a COVID-related leave PRIOR to the employee starting the leave. The employees will still need to provide documentation but they may begin the leave and then provide backup as soon as it’s practicable.

CDC Quarantine — The CDC is now only recommending a quarantine of 10 days after a positive test (rather than the original 14 days), assuming mild to moderate effects. However, the employee must also be symptom-free for at least 24 hours.

Intermittent FFCRA Leave — The original rules allowed you to approve or deny the employee’s request for intermittent leave. Now, you must approve it unless the intermittent leave poses a higher risk of infection to others. This change will usually only affect employees using the emergency childcare leave.

Healthcare Provider Definition — The Department of Labor’s (DOL) definition of healthcare providers included everyone working at a healthcare organization, regardless of position. This definition has been narrowed to those actually providing healthcare…but check with your attorney if this might affect your company.

We understand how hard it is to know what the current guidance might be because it has changed so many times. Tracking all the changes related to COVID is even harder than keeping up with California laws. Please contact us if you have a specific question.