Are you a Small Business Owner in California? Do you know what came into effect for 2019?
Many things can significantly impact your small business’ bottom line, such as changes to overtime policies, minimum wage, rest period requirements, and scheduling rules. But no matter what changes happen, it’s important that you as a small business owner in California stay compliant with all new federal, state, and city employment laws in place for 2019. We know that can be a big challenge to manage.
Last year, Gov. Jerry Brown considered 1,217 pieces of legislation passed by the state Senate and Assembly, signing 1,016 into law, many of them employment-related. Those that passed took effect on January 1, 2019, but you may not be aware of all of them.
As a Small Business Coach here in California, now more often than not, I tell many of my small business clients “you need to hire a lawyer.” This is because the laws are so numerous, and often extremely complicated, that interpretation and implementation are fraught with pitfalls. To help you navigate the legal landscape around hourly workers, we’ll briefly touch on some 2019 employment laws that could affect your workforce in CA.
Many bills springing from the #MeToo movement became law, including bills that ban secret settlements of harassment allegations. Staying compliant with these laws in particular will be of high priority for small business owners moving forward.
Other bills have to do with minimum wages. You’re probably already aware that California’s minimum wage is now $12 per hour. This is in addition to many other employment law changes, including amendments to rules regarding equal pay, workplace safety, salary history, immigration, criminal background checks, and parental leave.
Predictive scheduling changes are also in effect, with rules stating employers must post schedules in advance. In addition, extra pay must be given to employees if an employer changes the schedule after posting, plus, an adequate rest period between shifts is required unless a worker volunteers to work during said rest period.
There are many areas in which bills were passed this year, regarding:
- Workplace discrimination, harassment and retaliation protections.
- Prohibitions on certain hiring practices.
- Human trafficking training.
- Paid Family Leave.
- Lactation accommodation.
- Wage and hour protections for employees.
- Workplace safety and workers’ compensation.
- Required gender representation on boards of directors.
But going even further back, bills that were signed into law last year are still having adverse effects on many of my clients’ business models. In some cases, I have seen employee-related expenses potentially skyrocketing, putting in jeopardy the very jobs the state intends to protect.
Take SB-490, for instance, where barber shops, hair salons, spas and beauty salons are required to pay twice the state minimum wage for commissioned wages to licensed barbering and beauty employees.
In short, for a salon spa client of mine, and probably many of the businesses in this industry, this represents a big hardship. Spas and salons already have very tight margins, especially here in California. Payroll tends to be in the 60-70% range of overall expenses before this law comes in to play (when paying current minimum wage, plus commissions).
A conservative interpretation of this bill pushes payroll to 85% or more of total expense, forcing owners to consider other ways to adjust their business models and reduce the impact of this bill. (Note: I do not interpret laws; that should be done by an employment attorney, which I am not. This was an estimate based on a specific interpretation of the law, but the text of this particular bill I found extremely difficult to interpret. The impact may differ, depending on an attorney's interpretation.)
So what can be done? How can you as a small business owner in California keep track of all the bills?
Here are four things that you can do to help prepare your business for these and any upcoming employment-related laws that may be passed in years to come:
1) Get professional legal advice when interpreting these new and recent laws.
Work with a business/employment attorney, especially if you are in an industry that has recently been affected, like the example above.
Get to know which laws impact your business, what's already in place and what's forthcoming. This is your responsibility as a business owner, and it's just wise to do so.
Understand how your business is affected. For instance, some laws have lowered the number of employee limits from 50 to 25 before you have to comply. This means you could now be out of compliance in some cases.
2) Hire a small business coach to help review any impacts to your expenses and bottom line.
A business coach can help you redefine your business model to limit impacts and mitigate risks.
I am continually working with the business attorneys of my clients to analyze bills like these and understand the impacts to their bottom lines. I help them understand how, and to what extent, they can adjust their business models to lessen the impact. I expend a lot of effort helping them understand that the need is even greater to assess the business model in light of new rules.
3) Ask your payroll company for help with your HR and employee policies.
Many payroll companies have options for HR and policy management.
Payroll companies provide their services in a streamlined way, thus helping the business owner keep track of all these entangled employment requirements. They can provide you with an HR consultant to review all your current policies and get the right procedures in place. This ensures you are in compliance with all the new laws. They also provide services such as creating employee handbooks and safety manuals that can get your documentation where it needs to be.
4) Sign up with California business advisory groups to stay informed.
One such group is the CalChamber, with their HRCalifornia Extra newsletters. They regularly send out information about new and changing laws here in California. They also send Alerts when potential bills move through the State assembly and Senate floors.
So here is my advice to sum it up:
Your goal this year as a CA business owner is to become more informed and get qualified advice. This will help you, hopefully, avoid losing a potential lawsuit in the future. Small business coaching advice will also help you protect your business model in this ever-changing California climate.
Contact INFIX and we can help you reassess your business model in light of new and changing laws for 2019 and beyond.
To sign up for a FREE 30-minute small business consultation, click the button below and my schedule will pop up. Choose your spot and calendar it and we’re good to go!