STATE RESOURCES
California Department of Industrial Relations
www.dir.ca.gov/dlse/dlse
WagesAndHours.html
Publications
The DIR has published the following materials regarding wage and hour laws in the state:
Poster
Employers can use this DIR model poster to satisfy their posting requirements.
On April 30, 2018, the California Supreme Court adopted a new test for classifying workers as independent contractors for purposes of the California wage orders. In Dynamex Operations West, Inc. v. Superior Court, the Supreme Court ruled that employers must use a three-part “ABC test” to establish whether a worker may be properly classified as an independent contractor for this purpose.
Worker Classification
Whether a worker is covered by a particular law or is entitled to receive a particular benefit often depends on whether the worker is an employee or an independent contractor. In general, employment laws, labor laws and related tax laws do not apply to independent contractors.
For purposes of federal labor and employment laws, no standard test has emerged to determine the true character of an independent contractor relationship. In fact, employers may have to apply various tests to determine how issues of employment benefits, workers’ compensation, unemployment compensation, wage and hour laws, taxes or protection under Title VII of the Civil Rights Act, the American with Disabilities Act (ADA), and the Family and Medical Leave Act (FMLA) affect their workforces.
In addition, employers should be aware that state and local variations of these tests may apply in certain situations.
California Wage Orders
Several federal laws regulate wage and hour requirements. California law also imposes state wage and hour requirements. When federal and state laws are different, the law that is more favorable to the employee will apply.
The Industrial Welfare Commission (IWC), part of the California Department of Industrial Relations (DIR), established wage orders to enforce and administer California’s wage and hour requirements throughout the state. Because the IWC is no longer in operation, the Division of Labor Standards Enforcement (DLSE) currently enforces the wage orders.
In total, there are 17 California wage orders, plus a minimum wage order, that California employers must comply with. Each wage order covers a separate industry and imposes requirements relating to minimum wages, work hours and basic working conditions (such as meal and rest periods) for California employees.
Overview of Dynamex v. Superior Court
In Dynamex v. Superior Court, the California Supreme Court was asked to determine what standard applies under California law for purposes of determining whether workers should be classified as employees or as independent contractors under the California wage orders. In this case, a group of delivery drivers sued their employer, Dynamex, arguing that the drivers had been misclassified as independent contractors, rather than employees. The delivery drivers claimed that, due to this misclassification, Dynamex violated Wage Order No. 9 (the applicable order governing the transportation industry), as well as various sections of the California Labor Code.
Prior to 2004, drivers working for Dynamex who performed similar pickup and delivery work as the current drivers were classified as employees. In 2004, however, Dynamex adopted a new policy and contractual arrangement under which all drivers are considered independent contractors, rather than employees. Dynamex argued that, in light of the current contractual arrangement, the drivers are properly classified as independent contractors.
The Supreme Court’s ruling—The “ABC Test”
Historically, courts have applied a multifactor balancing test in determining whether a worker is an employee or an independent contractor. However, the California Supreme Court abandoned the traditional balancing test, and instead adopted a new three-part test that California employers must use when determining whether a worker can be classified as an independent contractor for purposes of the wage orders.
This three-part test is commonly referred to as the “ABC test” due to its three factors to consider. Under this test, a worker is properly considered an independent contractor to whom a wage order does not apply only if the employer establishes that all of the following are true:
- That the worker is free from the control and direction of the employer in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- That the worker performs work that is outside the usual course of the employer’s business; and
- That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the employer.
This test generally favors a determination that workers are employees, rather than independent contractors. The ABC test presumes that all workers are employees and allows workers to be classified as independent contractors only if the employer demonstrates that the worker in question satisfies each of the three conditions.
Impact on Employers
Employers that employ independent contractors in California will want to ensure that their workers are properly classified under the new ABC test adopted by this ruling. As a result, these employers should review their employment relationships and contractual arrangements to evaluate the impact that this ruling may have on their business.
Employers in California should also keep in mind that this ruling applies for purposes of the California wage orders only. Other existing worker classification tests continue to apply for federal law purposes.
More Information
Contact Scurich Insurance for more information on wage and hour laws in California.
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Workers’ Compensation Insurance is an important product for employees. There are six common myths that surround this insurance, though. Debunk the myths so you can understand and maximize your benefits.
1. Small businesses don’t need to offer Workers’ Compensation Insurance.
You may work in a small business with only a few employees. Federal and state laws dictate that most businesses with one or more employees must carry Workers’ Compensation insurance. Be sure your employer carries this valuable insurance even if you are a solo employee.
2. I don’t need Worker’s Compensation insurance because my job is low-risk.
Some jobs, like construction, farming and commercial fishing, are dangerous. However, even low-risk jobs include injury and illness risks. You could develop carpal tunnel while typing or slip and fall in the break room during lunch. Your employer will pay lower Workers’ Compensation insurance premiums if you work in a low-risk job, and you absolutely must ensure you’re covered no matter what type of work you perform.
3. I’m careful and won’t get hurt.
While you might have an accident-free employment history, it only takes a second for an accident to happen. Plus, some workplace accidents or injuries occur because of someone else’s actions. Ensure you are covered by Workers’ Compensation regardless of your careful track record.
4. My boss is like family, and I could never sue.
It’s great that you have such a good relationship with your boss and feel like family. However, you are still employer-employee. By law, your employer must provide Workers’ Compensation for you. You also owe it to yourself and your dependents to have this valuable coverage in place in case you are injured or disabled and can’t work.
5. My boss will pay my work-related injury or illness expenses out-of-pocket.
Perhaps your boss has vowed to pay out-of-pocket for your medical, living and others expenses if you’re injured or become ill on the job. Unfortunately, your boss may decide not to pay, particularly when the Workers’ Compensation claims reach thousands of dollars or affect multiple employees. Always protect yourself with Workers’ Compensation insurance so that you can ensure your expenses are paid.
6. Any pain I feel at work is eligible for Workers’ Compensation.
While assembling furniture at work, you notice that your arm hurts. Instead of rushing to file a Workers’ Compensation claim, think about when and where the pain started. If it originated from an activity or injury that occurred outside of work, don’t file a Workers’ Compensation claim.
Workers’ Compensation insurance is important. Understand these six myths as you make sure you’re covered. For more details, contact your Human Resources manager or insurance agent.
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Whether you stand all day, operate heavy machinery or handle chemicals, you need to protect your feet as you work. Several foot safety tips reduce injuries and help you maintain a safe work environment.
When to Wear Safety Footwear
Safety footwear protects your feet against numerous injuries, including punctures, impacts, electrical shock and compression. If you work in any hazardous work environment, you probably need to wear safety footwear as part of your daily uniform. Protective shoes also protect your feet if you suffer from weak ankles or other medical conditions.
Available Types of Safety Footwear
Depending on your job and preferences, you may select safety boots or sneakers. Available in a variety of styles and colors, the best safety shoes include a CSA certification and may include:
Safety-toe – features a special toe covering that protects the foot from dropped objects
Steel insole – stabilizes feet and protects them from joint and bone injuries or problems
Metal instep – provides a barrier against glass, nail and other sharp object punctures
Metatarsal protection – reduces injuries to your upper feet and internal bones
Electric protection – absorbs shock through specially made soles
Heat resistant – resists heat-related injuries
Water resistant – repels water and keeps feet dry
Nonslip – improves traction on various surfaces
Where to Purchase Safety Footwear
Your employer may provide strict guidelines and limitations about exactly which safety shoe you may wear, including where you may purchase this gear. If you can select the safety shoes you wear, check specialty footwear stores or online retailers. Because you want to protect your feet, select only the right shoes for your job and feet. Price should be secondary as you promote safety.
How to Fit Your Safety Footwear
When trying on safety footwear, ensure a proper fit.
- Try on shoes in the afternoon to accommodate swelling that occurs naturally during the day.
- Wear your regular work socks and any special supports.
- Ensure ample toe room since the shoes typically do not stretch with wear.
- Check for snugness around the heel and ankle.
- Walk around a bit to check for comfort.
Care Instructions
Most safety footwear requires ongoing care and maintenance. Before you wear them for the first time, apply a water-resistant coating. Every day, inspect your shoes for damage, including sole cracks, leather breaks or toe cap exposure. Always replace your safety footwear if you notice signs of wear or damage that you cannot repair and after a puncture, impact or other event that may compromise the shoe.
Protect your feet at work when you wear the right safety footwear. Talk to your employer and check OSHA resources as you purchase, maintain and wear shoes that protect your feet every day.
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The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) recently made changes to the system for determining employers’ experience mods. Because experience mods are one of the largest factors when determining your workers’ compensation premiums, it’s important to know the details of these changes, and what they mean for your business.
Split Point Changes
The largest change the WCIRB made was to the split point, which had not been changed since 2010:
- Losses in excess of the split point will now be ignored during the calculation of an employer’s experience mod. These losses were previously considered, but did not carry as much weight as losses below the split point. Excess losses focus on the severity of injuries and illnesses in the workplace, a focus that will no longer be considered under the new changes to the rating system.
- Losses up to the split point will still count fully in the calculation of an employer’s experience mod. These primary losses focus on the frequency of injuries in the workplace, as they are fully weighted during the calculation of an experience mod. Because the WCIRB chose to focus on primary losses, the agency believes that employers will be encouraged to develop safe workplaces and reduce the occurrence of injuries and illnesses.
In addition to the focus on primary losses, the split point will now vary between approximately $4,500 and $75,000, based on the size of a business, instead of the previous $7,000 fixed split point. There will be approximately 90 threshold split points. The WCIRB believes that a varying split point will benefit smaller employers, who could previously expect abnormally high experience mods after a single, catastrophically large loss. Additionally, other states that use a fixed split point typically set them at $15,000 or higher, which the WCIRB believes is unfairly high for many small businesses.
For example, under the old split point system, a small employer with a single $60,000 loss would have a vastly different experience mod than a larger employer with 10 $6,000 losses. Under the new system, the WCIRB hopes to encourage safety at all times instead of punishing employers for abnormally high and rare losses.
What the Change Means for You
Although the varying split point can now reach extreme heights, the WCIRB believes that the elimination of excess loss consideration will cause premiums to remain flat. However, it’s possible that you could see your split point—and consequentially, your premiums—rise if you increase your workforce substantially.
The most important factor when working to lower your workers’ compensation premiums is to reduce the frequency of injuries and illnesses in the workplace—especially now that the calculation of your experience mod will be determined almost entirely by primary losses. For help keeping your workplace safe and responding to injuries and illnesses at your business, contact us at 831-661-5697 today.
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OSHA’s final rule on electronic reporting requires certain employers to submit data from their injury and illness records electronically so it can be posted on the agency’s website. Because the rule is an extra requirement on top of existing OSHA recordkeeping standards, affected employers need to be ready to comply with the rule before the proposed Dec. 1, 2017, deadline.
Other News and Tips
Preparing for OSHA Inspections
If an unannounced OSHA inspection finds violations at your business, you may have to pay thousands in fines and watch as your reputation plummets. Fortunately, OSHA inspections generally follow an established procedure that you and your staff can prepare for.
When an OSHA compliance officer arrives at your business, it’s important to check his or her credentials and then determine if you’ll give consent to the inspection. Although you can refuse an inspection or give only partial consent, the compliance officer will take note of this and OSHA may take further action.
Once an inspection begins, the goal should be to determine its purpose and set any ground rules. You should also be prepared to provide proof that your business is in compliance with OSHA standards. During the walkaround process, be sure to take notes of what the inspector documents so you can review them later.
OSHA inspections can be stressful, even when your business is in full compliance. Scurich Insurance can provide you with our inspection guide, “Be Prepared for an OSHA Inspection,” and help your business impress OSHA compliance officers.
OSHA Removes Employee Fatalities from Home Page
Although OSHA used to include a URL link on its home page that would direct viewers to a list of employee fatalities, the agency recently moved the link to a separate page on its website.
According to a spokesperson from the Department of Labor, the link was moved in order to increase the accuracy of workplace data, as previous listings included fatalities that were outside OSHA’s jurisdiction. However, OSHA will keep the list of employee fatalities on its website and continue to review data from employers.
Although the electronic reporting rule initially required certain employers to start submitting their required information by July 1, 2017, OSHA’s Injury Tracking Application website wasn’t ready to receive electronic reports in time, and OSHA proposed Dec. 1, 2017, as the new deadline. The rule doesn’t change an employer’s requirements to complete and retain regular injury and illness records, but some employers will now have additional obligations. Here are the requirements for the rule:
- Establishments with 250 or more employees that are required to keep injury and illness records must electronically submit the following forms:
- OSHA Form 300: Log of Work-Related Injuries and Illnesses
- OSHA Form 300A: Summary of Work-Related Injuries and Illnesses
- OSHA Form 301: Injury and Illnesses Incident Report
- Establishments with 20 to 249 employees that work in industries with historically high rates of occupational injuries and illnesses must electronically submit information from OSHA Form 300A.
The final reporting requirements will be phased in over two years. After the initial Dec. 1, 2017, deadline, establishments with 250 or more employees must submit information from OSHA Forms 300, 300A and 301 by July 1, 2018. Beginning in 2019 and every year thereafter, the information must be submitted by March 2.
For more help preparing for this new rule, call us at 831-661-5697 and ask to see our comprehensive Compliance Overview on OSHA’s electronic reporting rule.
New Silica Rule Enforcement Begins
A new OSHA rule on respirable crystalline silica will require employers to limit their employees’ exposure to silica hazards and provide medical exams to monitor highly exposed employees. The rule is scheduled to come into effect on June 23, 2018; however, OSHA began enforcement of the new rule in the construction industry on Sept. 23, 2017.
Under the new rule, employers must reduce the permissible exposure limit (PEL) for respirable silica to 50 micrograms per cubic meter of air (50 µg/m3). The rule also requires employers to take the following steps:
- Establish engineering controls to limit employees’ exposure to the new PEL.
- Provide employees with respirators when engineering controls alone do not provide enough protection.
- Establish a written silica exposure control plan.
- Provide medical exams to employees who are exposed to levels of respirable silica at or above the new PEL for 30 or more days a year.
To see more information on the respirable silica rule, and to see specifics about the rule’s application in the construction industry, visit OSHA’s website.
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Workers’ compensation is a system of no-fault insurance that provides medical and monetary benefits to employees or their survivors for work-related injuries, diseases and deaths.
The California Workers’ Compensation Act (WCA) defines employer responsibilities under the state’s workers’ compensation program. The Division of Workers’ Compensation (DWC) of the California Department of Industrial Relations monitors and enforces employers’ compliance with these requirements throughout the state.
Coverage Requirements
Almost all California employers must secure workers’ compensation coverage for their employees. The WCA defines an employee as any individual working for another individual or organization who is not an independent contractor. Employers are bound by WCA coverage requirements even if they only have one employee, regardless of whether the employee works full-time or part-time.
Coverage requirements also apply for temporary workers. Temporary employment agencies, employment referral services, labor contractors and any other similar entities hiring temporary workers are solely responsible for their employees’ coverage.
To meet coverage requirements, employers can either secure a workers’ compensation insurance policy from a private insurance company licensed to do business in California or apply for self-insurance certification with the Office of Self Insurance Plans (OSIP).
Self-Insurance
A self-insured employer uses its assets, rather than an insurance policy provided by an insurance carrier, to cover its obligations under the workers’ compensation program. Employers that wish to self-insure must obtain authorization from the OSIP. Whether the OSIP will grant this authorization depends on an employer’s financial strength, proposed benefit delivery system and loss prevention program. To qualify, an employer must:
- Have at least $5 million in shareholder equity;
- Have net profits of $500,000 or more for the five years immediately prior to the application;
- Make a deposit based on the employer’s expected future liabilities, with a minimum amount of $220,000;
- Hire a certified third-party administrator or ensure that internal staff becomes OSIP-certified to process and handle benefit claims; and
- Provide the following documents:
- Certified, independently-audited financial statements; and
- A proposed injury and illness prevention program that meets, at a minimum, Cal/OHSA safety and health regulations.
Self-insured employers are subject to audits by both the DWC and OSIP. These audits are used to verify that self-insured employers are making benefits payments promptly and properly.
Certain employers are not allowed to self-insure. These employers include:
- Professional employer organizations;
- Leasing employers;
- Temporary service employers;
- Any employer in the business of providing employees to other employers; and
- Employers that have allowed their coverage to lapse (unless they receive authorization from the DWC).
Group Self-insurance
Multiple employers can create self-insurance groups by combining their assets to insure against their individual liabilities. Authorization for group self-insurance requires employer groups to show they have sufficient financial stability to meet all their obligations under the WCA. In addition, a group of employers seeking to self-insure must:
- Operate in the same industry;
- Make a deposit equal to 135 percent of its estimated future liabilities;
- Have sufficient funds to cover any losses and administrative expenses for at least eight of out of 10 years;
- Obtain excess insurance for claims over $500,000; and
- Report to each member of the group any possible conflict of interest between the group and any vendors.
Self-insurance Annual Renewal
Self-insured employers must submit annual reports to show their continued compliance with eligibility requirements. These reports are also used to assess the adequacy of each self-insurance deposit.
Employers that are required to deposit additional funds to their initial deposit must make their contributions within 60 days of filing their annual report or by May 1 of the year in question, whichever is comes first.
COVERAGE NOTICE REQUIREMENTS
Employers subject to the WCA must display a notice in a conspicuous place stating that they have workers’ compensation insurance coverage that complies with the WCA. Failing to display this notice constitutes a misdemeanor and may be considered evidence that the employer does not have insurance.
The coverage notice must be available in English and Spanish and must include specific information about the employee’s rights and obligations under the WCA. The DWC has issued a model poster that employers can use to fulfill these requirements.
An employer that fails to provide this notice must allow its employees to be treated by their physician of choice for any injuries that occur during the time the notice is not displayed.
In addition to the posting requirement, employers must provide the same information to new employees at the time of hiring (or by the end of their first pay period). New employees must also receive instructions on:
- How to obtain appropriate medical care for job-related injuries;
- The role and function of the primary treating physician; and
- How to obtain and submit the form the employee must use to notify the employer he or she wants to use a personal physician.
- If an employer is insured, the insurance carrier is responsible for providing the employer with copies of a notice that contains all the required information for new employees.
INJURY Reporting Requirements
Under the WCA, employers have reporting obligations any time an employee sustains a work-related condition that results in:
- Lost work time beyond the employee’s work shift at the time of injury; or
- Medical treatment beyond first aid.
For this purpose, “first aid” means any one-time treatment and any follow-up visit for observation of minor scratches, cuts, burns, splinters, or other minor industrial injuries that do not ordinarily require medical care. Treatment that meets this definition is still considered “first aid” even if it is provided by a medical professional.
Note: Effective
Jan. 1, 2017, workers’ compensation insurance carriers are required to report all work-related injuries,
including those that involve only first aid with no lost work time, to the California
Workers’ Compensation Insurance Rating Bureau (WCIRB). The WCIRB uses this information to, among other things, help determine an employer’s premium rates for workers’ compensation insurance.
However, this change does not affect an employer’s injury-reporting obligations under the WCA. An employer may chose, but is still not required, to report injuries that do not result in lost work time or treatment beyond first aid.
When an employee incurs medical expenses for first aid, the billing medical provider has an obligation to report the treatment to both the DIR and the employer’s insurance carrier. The medical provider’s report (or an employer’s voluntary report of a first-aid-only injury for which no medical expenses are incurred) is what triggers an insurance carrier’s obligation to report the claim to the WCIRB under the new rule.
This reduces an insured employer’s incentive to pay medical bills for first-aid-only treatment out of pocket instead of allowing its workers’ compensation insurance carrier to cover the expenses, because these types of claims can now affect an employer’s premium rates regardless of how the first-aid treatment expenses are paid. �
Within one working day after an employer receives notice or first obtains knowledge of an employee’s work-related injury that results in lost work time or medical treatment beyond first aid, the employer must:
- Provide the employee with Form DWC 1 (“Workers’ Compensation Claim Form & Notice of Potential Eligibility”);
- Ask the employee to complete the employee section of form DWC 1 and return it to the employer;
- Complete the employer section of the form; and
- Within one working day after receiving the form back from the employee, submit the fully completed form to its insurance carrier (or directly to the DIR, if the employer is self-insured) and provide a copy to the employee.
In addition, employers must fill out Form DLSR 5020 (“Employer’s Report of Occupational Injury or Illness”) and send it to their insurance carriers or claims administrators within five days after first receiving notice or obtaining knowledge of an injury.
In the event that an employee becomes the victim of a crime while on an employer’s premises, the employer must provide written notice to the employee, within one day of the crime, stating that he or she is eligible for benefits resulting from physical and psychiatric injuries.
Reporting for self-insured employers
When employers secure coverage with a policy from an insurance company, the insurance company will work with the employer on preparing, maintaining and submitting reports and records that the DWC requires to monitor compliance with California law.
An employer that decides to self-insure, however, must meet certain reporting obligations on its own. One of these obligations is to file an annual report as prescribed by the DWC. Annual reports must show:
- The amount of all compensation claims;
- The amount of benefits paid to date;
- An estimated amount of future liability on open claims under state and federal laws;
- The average number of employees and the total wages for each adjusting location;
- A list of all open indemnity claims; and
- The amount of security deposit made by the employer.
MORE INFORMATION
Please see the DWC website or contact Scurich Insurance for more information on workers’ compensation laws in California.
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