In the aftermath of the 2018 Dynamex decision and its subsequent codification in AB5 (the “gig workers bill”), California employers are finding themselves having to treat former independent contractors as employees under California state law. This not only applies to employers physically operating in California but also any employer who has workers located in the state.
This post and the next will outline the employers’ responsibilities to these new employees under California state law:
(1) Provide all the correct papers.
(2) Give employees a handbook and have them acknowledge receipt.
(3) Pay the correct minimum wage.
(4) Disability Insurance, Workers’ Compensation, & Unemployment all apply.
(5) Provide breaks.
(6) Employers may need to provide healthcare coverage.
(7) Provide paid time off.
(8) Provide sick leave.
(1) Provide all the correct papers to the new hire orientation.
In addition to having new employees fill out their federal and state withholding forms and I-9 verification forms, employers must also provide pamphlets with information on:
- Workers’ Compensation, see here;
- Sick Leave and Workers’ Compensation Carrier (only for FLSA, non-exempt employees), see here;
- Sexual Harassment (Form DFEH-185P);
- Disability Insurance (Form DE 2515);
- Paid Family Leave (Form DE 2511); and
- Rights of Victims of Domestic Violence, Sexual Assault, and Stalking, see here.
(2) Give employees a handbook and have them acknowledge receipt.
A Handbook of company policies is not only a good idea for providing useful information for an employee but also as a good liability shield should the employer find themselves in court or agency tribunal challenging a claim.
Additionally, as many employers continue to operate remotely because of the novel coronavirus pandemic, it would be a good idea to develop and implement work-from-home policies for remote employees. For more information about those types of policies, see our previous blog post on work-from-home policies here. This policy should be included in the handbook materials provided to the employer.
(3) Pay the correct minimum wage.
Effective January 2020, California employers with 25 employees or less must pay at least $12/hr, and employers with more than 25 employees must pay at least $13/hr.
Each subsequent year, that hourly wage increases by $1/hr. Some employers may even be subject to local minimum wage ordinances, which could be greater than the state requirement – so check the city and county to ensure correct wages.
If an independent contractor turned employee is working more than 40 hours a week, then they are likely entitled to overtime pay at one and one-half time. That means an employer must pay them overtime for any “hours worked in excess of 40 hours in any workweek; all hours worked in excess of eight . . . in any workday; and for the first eight hours worked on the seventh consecutive day of work in a workweek[.]” Even if an employee is considered part-time or hourly, if that employee should work over 40 hours in one week, they are likely entitled to overtime pay.
Payment to employees should be in cash or by check without fees or discounts or through a voluntary direct deposit system. On payday, California employers must provide written pay statements containing:
- Employee’s name and employee ID (or last four digits of their SSN)
- Employee’s address
- Gross wages
- All deductions
- Total hours worked
- Hourly rate
- Net wages earned
- Pay period dates
- Any overtime pay and dates earned
(4) Disability Insurance, Workers’ Compensation, & Unemployment all apply.
Employers should either contribute to the state’s Disability Insurance program or establish a voluntary private plan, with the Employment Development Department’s approval, for the new employee. This includes full and part-time employees.
Additionally, employers should plan to carry workers’ compensation insurance and contribute to the state’s unemployment insurance for newly hired employees.
Next week, we will share the rest of the responsibilities in part two of this series.
