The new decade is starting off with a tsunami of new laws and regulations that will affect California businesses. Companies operating in California will have to be prepared for significant changes or open themselves up to potential litigation, fines, and other risks.

Here’s what you need to know coming into the new year:

1. AB 5

The controversial AB 5 creates a more stringent test for determining who is an independent contractor or employee in
California.  Known as the “ABC test,” the standard requires companies to prove that people working for them as independent contractors are:

A) Free from the firm’s control when working;
B) Doing work that falls outside the company’s normal business; and
C) Operating an independent business or trade beyond the job for which they were hired.

Legal experts recommend that employers:

• Perform a worker classification audit, and review all contracts with personnel.
• Notify any state agencies about corrections and changes to a
worker’s status.
• Discuss with legal counsel whether they should now also include them as employees for the purposes of payroll taxes, workers’ compensation insurance, federal income tax withholding, and FICA payment and withholding.

2. Wildfire safety regulations

Cal/OSHA issued emergency regulations that require employers of outdoor workers to take protective measures, including providing respiratory equipment, when air quality is significantly affected by wildfires. Under the new regs, when the Air Quality Index (AQI) for particulate matter 2.5 is more than 150, employers with workers who are outdoors are required to comply with the new rules. These include providing workers with protection like respirators, changing work schedules or moving them to a safe location.

3. Arbitration agreements

Starting Jan. 1, the state will bar almost all employee arbitration agreements. AB 51 bars employers from requiring
applicants, employees and independent contractors to sign mandatory arbitration agreements and waive rights to filing
lawsuits if they lodge a complaint for discrimination, harassment, wage and hour issues. Businesses groups sued to overturn the law on the grounds that it is preempted by the Federal Arbitration Act.

4. Overtime rules

New federal overtime regulations are taking effect for non-exempt workers. Under the new rule, employers will be required to pay overtime to certain salaried workers who make less than $684 per week – or $35,568 per year – up from the current threshold of $455, or $23,660 in annual salary.

5. Consumer privacy

Starting Jan. 1, under the California Consumer Protection Act, businesses that keep personal data of residents are required to safeguard that information and inform website users how their personal data may be used. The law applies to firms with $25 million or more in annual revenues or those that sell personal information as part of their business.

6. Return of the individual mandate

A new law brings back the individual mandate requiring Californians at least to secure health insurance coverage or face tax penalties. This comes after the penalties for not abiding by the Affordable Care Act’s individual mandate were abolished by Congress in late 2017. Starting in 2020, California residents are required to have health insurance or pay excess taxes. This will affect any of your staff who have opted out of your group health plan as it may mean they are going without coverage, unless they have opted to be covered by their spouse’s plan. If you have staff who didn’t enroll in your plan for 2020, they may have to wait until your group’s next open enrollment at the end of the year. That could force them to pay tax penalties.

7. New audit, X-Mod thresholds

The threshold for physical workers’ compensation audits for California policies incepting on or after Jan. 1 is $10,500 in annual premium, a drop from $13,000. This means that any employer with an annual workers’ comp premium of $10,500 or more will be subject to a physical audit at least once a year. On top of that, the threshold for experience rating (to have an X-Mod) has also fallen – to $9,700 in annual premium as of Jan. 1, from $10,000.

8. Harassment training partly pushed back

Employers with five or more workers were required to conduct sexual harassment prevention training for their staff by the end of 2019 under a California law passed in 2018. A new law extends the compliance deadline for some employers who had already conducted training prior to 2019. The original law, SB 1343, required all employers with five or more staff to conduct sexual harassment prevention training to their employees before Jan. 1, 2020 – and every two years after that. If you have never trained your staff, you should have done so in 2019.

But if you have, here are the new rules:
• If you trained your staff in 2019, you aren’t required to provide refresher training until two years from the time the employee was trained.
• If you trained your staff in 2018, you can maintain the two-year cycle and comply with the new Jan. 1, 2021 deadline. You did not have to repeat the training in 2019.

9. Hairstyle discrimination

A new law makes it illegal for employers to discriminate against employees and job applicants based on their hairstyle if it is part of their racial makeup. The CROWN Act (Create a Respectful and Open Workplace for Natural Hair), defines race or ethnicity as “inclusive of traits historically associated with race, including, but not limited to hair texture and protective hairstyles like braids, locks, and twists.” This new definition of race means that natural hair traits fall under the context of racial discrimination in housing, employment and school matters.

10. Reporting serious injuries

A new law broadens the scope of what will be classified as a serious illness or injury which regulations require employers to report to Cal/OSHA “immediately.” The new rules being implemented by AB 1805 are designed to bring California’s rules more in line with Federal OSHA’s regulations for reporting. It will mean that some injuries that were not reportable before will be, such as:
• Any inpatient hospitalization for treatment of a workplace injury or illness will need to be reported to Cal/OSHA.
• An inpatient hospitalization must be required for something “other than medical observation or diagnostic testing.”
• Employers will need to report any “amputation” to Cal/OSHA. This replaces the terminology “loss of member.” Even if the tip of a finger is cut off, it’s considered an amputation. As of yet, there is no effective date for this new law, as enabling regulations have to be written – a process that will start this year.

Gov.  Gavin Newsom has signed a measure into law that will greatly expand when employers are required to report workplace injuries to Cal/OSHA. The new law, AB 1805, broadens the scope of what will be classified as a serious illness or injury which regulations require employers to report to Cal/OSHA “immediately.” As of yet there is no effective date for this new law, but observers say regulations will first have to be written, a process that would start next year.

The definition of “serious injury or illness” has for decades been an injury or illness that requires inpatient hospitalization for more than 24 hours for treatment, or if an employee suffers a “loss of member” or serious disfigurement. The definition has excluded hospitalizations for medical observation. Serious injuries caused by a commission of a penal code violation (a criminal assault and battery), or a  vehicle accident on a public road or highway have also been excluded.

Compliance

Rules for reporting serious injuries and illness or fatalities are as follows:
• The report must be made within eight hours of the employer knowing, or with “diligent inquiry” should have known, about the serious injury or illness (or fatality).
• The report must be made by phone to the nearest Cal/ OSHA district office (note that a companion bill, AB 1804, eliminated e-mail as a means of reporting because e-mail can allow for incomplete incident reporting).

Because of the “diligent inquiry” component, employers should monitor any injured worker’s condition once they learn of an injury, particularly if they need to seek out medical treatment. A member of the staff should be on hand to monitor the employee and report to supervisors immediately if that person will need to be hospitalized. Employers should make sure that supervisors are made aware of the new rules so that any time a worker is injured to the point that they need to be  hospitalized, they know to notify Cal/OSHA within eight hours.

Also, if you have an employee that suffers a medical episode at work – such as a seizure, heart attack or stroke – you are required to report the hospitalization to Cal/OSHA. It’s better to err on the side of caution if an employee is hospitalized for any reason. Not doing so can result in penalties for failure to report or failing to report in a timely manner. Accordingly, it is important to educate management representatives, particularly those charged with the responsibility to make reports to Cal/OSHA, about the nuances of Cal/OSHA’s reporting rules.

One final note: The results of a serious injury or illness or workplace fatality will usually trigger a site inspection by Cal/OSHA, so be prepared if one should occur.

CAL/OSHA is developing rules that would require employers of outdoor workers to provide respiratory equipment when air quality is affected by wildfires. Smoke from wildfires can travel hundreds of miles and while an area may not be in danger of the wildfire, the smoke can be thick and dangerous, reaching unhealthy levels. Many employers want to hand out respirators to outside workers, but regulations governing the use of ventilators can be burdensome.

The California Code of Regulations, Title 8, Section 5144 requires employers that distribute respirators to implement a written respiratory protection program, require seal-testing before every use and conduct medical evaluations prior to use.

What to expect:
The regs are still in draft form and are unlikely to be completed this summer for the upcoming fire season.
But here is what you can expect:
The draft of the regulations would require that employers take action when the Air Quality Index (AQI) for particulate matter 2.5 is more than 150, which is considered in the “unhealthy” range. The protections would also be triggered when a government agency issues a wildfire smoke advisory or when there is a “realistic possibility” that workers would be exposed to wildfire smoke.

All California employers with “a worker who is outdoors for more than an hour cumulative over the course of their shift” would be required to comply with these regulations:
• Checking AQI forecasts when employees may reasonably be expected to be exposed to an AQI of more than 150.
• Establishing a system of communication to inform employees about AQI levels and changes in conditions that can lead to bad air quality, and about protective measures.
• Training workers in the steps they would have to take if the AQI breaches 150.

The regulations are pending with the Cal/OSHA Standards Board, which is expected to vote on them in July.  For now, if you do have outside employees who are confronted with working in smoky conditions, you should start stockpiling a two-week supply of N95 masks for all of your workers.

Business Interruption Coverage Can Cover Lost Income

PG&E has warned California residents and businesses that it may shut down the power grid for as long as five days for large portions of the state when there are high-wind conditions during the dry fire season. That’s because PG&E’s infrastructure was found to be the cause of several recent wildfires.

PG&E sent letters to customers informing them that “if extreme fire danger conditions threaten a portion of the electric system serving your community, it will be necessary for us to turn off electricity in the interest of public safety.”  With the specter of multiple-day power outages, businesses need to be prepared for keeping their operations going and preventing losses that may not be covered by insurance.

Just think how difficult it would be if you lost access to your computers, which are the nervous system of any business today. If you have no power, your operations could be shuttered for all intents and purposes.
There a number of steps you can take to make sure your business is resilient and can keep functioning during power outages, especially if they last a few days:

Identify vital business functions

Identify business processes that will be affected by a power outage. These processes will differ from business to business, but once you put them all down on paper, it will be easier for  you to make a plan to keep them going.

Create a continuity plan

Once you’ve identified those processes, you should brainstorm on how you can keep them going without your regular power supply.

• Create a plan outlining how employees should respond to the power outage.
• Post emergency numbers on sight for employees to call, including your electricity supplier to get an estimate on when power may be restored.

Back-up power a must

Consider investing in a back-up generator that can keep the critical functions of your firm going during a power outage. Generators need to be used with adequate ventilation to avoid risk of carbon monoxide poisoning. Never plug generators directly into power outlets. Never use a generator under wet conditions, and let it cool off before refueling.

Cloud storage and MiFi

If you have not done so, you should secure a means of paperless document and file storage on the cloud. If there is a power outage and an accompanying surge, you could quickly lose your data. Plan ahead with a cloud server.

You should also prepare a system of personal wireless hotspots, or MiFi devices, so that even when the internet goes down, you can finish important tasks requiring web access, such as setting up an e-mail auto-response.

Consider business interruption coverage

The best way to minimize the financial blow is to have the
proper insurance in place. A multiple-day power outage could really crimp your income stream and, if you lose money due to your inability to operate, the typical business owner’s policy won’t cover lost revenue.

But, a business interruption policy would. These policies will reimburse you for lost revenues due to a number of events, including “service interruption” due to power outages and other utility services interruptions.

The important caveat is that the interruption was not caused by any of your own faulty equipment or wiring. But if the power company is shutting down power, any losses you incur should be a valid claim.

More and more employers are banning cell phones in the workplace because they are distracting enough to be a serious safety issue for workers.

Most notably, General Motors has banned all employees, including its CEO, from walking around with their mobile phones while talking, texting or using other smartphone functions.
You already know the dangers of using your phone while behind the wheel, as vehicular deaths have spiked since the ubiquity of smartphones. But in many workplaces – think  warehouses, construction sites, factories and other worksites with equipment and inventory – the distraction of a smartphone can have deadly consequences. In busy workplaces, safety should be your primary concern. Consider the following:

Industrial machinery and phones don’t mix

OSHA bars the use of cell phones in construction regulations  pertaining to cranes and derricks, but the hazard exists across any dangerous equipment.
Some workers should absolutely not have their mobile phones on and within reach, such as powered industrial truck operators, forklift drivers and machinery users. If you have any of these among your workforce, you should strictly ban the use of mobile phones in any capacity during the use of industrial equipment.

You may consider extending the ban to include all of the other employees who regularly work around that equipment, particularly when they are walking or moving product to and from the warehouse. Also, if any staff from your office are in the work area, they too should refrain from using their phones while walking.

The biggest dangers

The best way to prevent workplace injuries is for employees to be aware of their surroundings. When people are using cell phones in an operational environment, it impedes their ability to recognize and react to hazards, particularly moving equipment like forklifts.
The biggest concern is people who are in the middle of writing long messages and engaging with others on social media or texting. Many of these apps have been shown to greatly reduce the user’s awareness of the real world around them.
There are many instances in which workers cause traumatic injuries or even death to themselves or others due to cell phone distractions that could have easily been prevented.

Potential property damage

Distracted cell phone usage is known to cause workers to accidentally misuse equipment or machinery, which can result in either small or serious damage to company property. Also, having a cell phone around hazardous chemicals or waste can pose a serious threat to the health and safety of all workers in the vicinity, in addition to property damage. Furthermore, the cost of replacing damaged property can have a major financial impact on your organization and possibly be at your expense.

WHAT YOU CAN DO

Create a policy that explicitly explains when and where  employees may use their mobile phones while on the job.  Some companies ban cell phones altogether, particularly call centers where employees’ devices are collected at the beginning of the day and kept in lockers until breaks. Consider the following for your rules:

• Mobile phones are barred for employees when performing on-site job-related tasks.
• Answering calls, texting, checking social media or using the Internet are all activities that fall under dangerous cell phone usage.
• Set parameters for when and where employees are allowed to use their phones.
• Consider restricting types of media and videos.
• Hold employees accountable to productivity levels. Note that time spent on the phone on personal matters is keeping them from focusing on their jobs.

One by-product of a strong economy is more employment, but the increased activity usually results in more workplace injuries.
That’s because there are more inexperienced people on worksites and when a company is busy and there is more activity, the chances of an incident occurring also increase. This is especially the case in manual labor environments from production facilities, warehousing and logistics to construction and other trades.

The September USG + U.S. Chamber of Commerce Commercial Construction Index found that 80% of contractors said that the skilled labor shortage is affecting jobsite safety and it’s the number one factor  ncreasing safety risk on the jobsite.  As business activity grows and the job market tightens, many companies are forced to hire more inexperienced workers who are not skilled at understanding all safety hazards.
Experienced personnel have the know-how to identify workplace hazards and understand the safety protocols for all aspects of their work. While training can help new hires, nothing beats experience. Additionally, with many businesses working hard to fulfill orders, workplaces are busier. Amidst all that hustle and bustle and people moving quickly, the speed and activity can also contribute to accidents in the workplace.

Also, aggressive scheduling may cause employers to use workers with less experience or training, and can push employees to work longer hours. If employees are working overtime, they may also be tired and fatigued, which can contribute to poor judgment and workplace incidents.
One other issue that’s affecting workplace safety and is related to the tight job market is that employers are often having to settle for workers they may not normally hire in other times. As you know, the scourge of opioid addiction has been rampant and unfortunately if someone  who has an addiction is hired, they may be a serious liability for the employer. Not only that, but more states are legalizing recreational marijuana and nearly 40 states have medical marijuana laws on the books.

Here’s what’s concerning construction employers on the worker addiction front, according to the USG + U.S.
Chamber of Commerce Commercial Construction Index:
• 39% were concerned about the safety impacts of opioids.
• 27% were concerned about the safety impacts of alcohol.
• 22% were concerned about the safety impacts of cannabis.

The report showed that while nearly two-thirds of contractors had strategies in place to reduce the safety risks presented by alcohol (62%) and marijuana (61%), only half had strategies to address their top substance of concern: opioids, which is a growing issue.

What you can do
In this environment of labor shortages and high competition for workers, employers need to put a premium on safety.

Despite widespread expectations, FedOSHA under the Trump administration has not backed off on enforcing workplace safety regulations.

In fact, the agency is as aggressive as ever and citations issued have also risen, after fines increased substantially three years ago. Based on
OSHA statistics, a company that’s inspected has only a 25%
chance of not receiving a single citation.

In other words, employers should keep up their safety regimens to not only avoid being cited but also to avoid workplace injuries.

WHAT’S GOING ON WITH OSHA

Enforcement emphasis still going strong – There are more than 150 local and regional enforcement emphasis programs as well as nine national programs in effect that were implemented at the end of the Obama administration. OSHA is dutifully enforcing them all.
Budget bucks the trend – Despite the budget-cutting at many federal agencies, OSHA saw a $5 million increase in its fiscal year 2019 budget from the year prior.
Most notably, that was the first budget increase since 2014. In addition, state-run OSHA programs also received a small budget enhancement of $2 million.

Fines increasing – OSHA has not moved to reverse the maximum fines for safety violations after they were increased substantially in 2016. They increased by 2.5% for 2019 from 2018 as the law requires that they keep pace with inflation.

 

 

Inspections stable – The number of inspections remains unchanged.
Focus on repeat violators – A focus on repeat violations has continued, with 5.1% of all violations in this category. The percentage has been over 5% since FY2016.
General duty clause – There has been expansion of the general duty clause to cite employers for heat stress, ergonomics, workplace violence, and chemical  exposures below the permissible limit.

NEW EMPHASIS

And 2018 also saw a new effort by OSHA to fine-tune its work. It issued a memo in May that formalized the use of drones with the employer’s consent) to collect evidence.

This has been somewhat controversial because it could enhance its ability to find other violations it might not normally find.

According to the Fiscal Year 2019 Congressional Budget Justification for the Occupational Safety and Health  Administration, increased enforcement seems to be more likely than a decrease.

Also, although there have been no officially released statements, the new electronic injury and illness reporting information will be used by OSHA and state plans to increase enforcement.

The increased budget, according to the Congressional Budget Justification, will support additional compliance safety and health officers to provide a greater enforcement presence and provide enhanced technical assistance to employers who need help in understanding how to achieve compliance with OSHA standards.