Technology

Technology has clearly become a part of our business and personal lives. Do you think this is a good or bad thing.?

On one hand, it has made our lives easier and workers more productive but on the other hand, there are those that believe technology is eliminating jobs. Why hire a person when you can buy a robot?

Certainly communication has changed and improved but there are those that will say we have become dehumanized. For example in my company I have stressed that email is great but pick up the phone and talk to people. That interaction is important to build relationships. Can you build a relationship with Facebook Emails, Text messaging and Twitter?

Any other thoughts about technology?

How important are tech jobs in your community?

What is your age?
Under 30
30 to 50
Over 50
 
I hope you are enjoying the Holiday season and that  you spend time with  your loved ones. It is certainly a special time of year and a time to reflect on our blessings. All the best to you, your family and your employees  in 2014. 


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

Deadline to Enroll for Health Coverage Beginning January 2014 is Rapidly Approaching

Deadline to Enroll for Health Coverage Beginning January 2014 is Rapidly Approaching

News Release: Tax Agency Votes to Release Over a Quarter-Billion Dollars to Small-Business Owners

"Tax Agency Votes to Release Over a Quarter-Billion Dollars to Small-Business Owners

Elimination of Automatic Security Deposits at the Board of Equalization a Big Win for Taxpayers
SACRAMENTO – Michelle Steel, Vice Chair of the State Board of Equalization, announced today that the Members of the Board have voted unanimously to eliminate the agency’s automatic security deposit requirement and begin the process of releasing over $296 million to small-business owners."
To continue reading, please click here. 

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At a recent U.S. Small Business Administration (SBA) meeting, I meant someone from Prosper Funding, LLC. Prosper is a peer to peer lending program. It is an interesting alternative to the traditional loans and investing options. This is a big asset for Small Businesses since it connects you directly to an investor as the investor chooses the investment that fits them. Check it out, I had my assistant try it out and it gives you an instant quote by plugging in basic criteria. 

Scott Hauge

President

Small Business California

2311 Taraval Street

San Francisco, CA  94116

shauge@cal-insure.com

415-680-2188 

CA Unemployment Insurance Program

Our Manager of Government Affairs, Lori Kammerer put this piece together on the Unemployment Insurance Program. Small Business California has been part of the working group. Read below and let me know if unemployment insurance would be an issue for you if it increased dramatically.

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California's Unemployment Insurance Program – is the insurance fund that pays state jobless benefits and is run by the Employment Development Department (EDD).  EDD owes nearly $10 billion to the federal government because the state has been paying more in jobless benefits than it has been receiving in employer-paid taxes.  The federal government has been paying the difference since 2009, including penalties and interest.  It is expected that California won’t be able to pay off the debt for at least 10 years, so the Governor and Labor Agency Secretary convened an advisory group comprised of management and labor to figure out a way to pay for the employer-financed program and pay off the debt…click here to continue reading.

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I thought it might be helpful to put the timeline for individual coverage under Covered California. 
2013
December 23rd - last day to enroll for coverage effective Jan. 1st, 2014

2014
January 15th - last day to enroll for coverage effective Feb. 1st, 2014
February 15th -  last day to enroll for coverage effective Mar. 1st, 2014
March 15th - last day to enroll for coverage effective Apr. 1st. 2014
March 31st - last day to enroll for coverage effective May 1st, 2014
December 15th - last day to enroll for coverage effective Jan. 1st, 2015
*Open enrollment for 2015 begins Nov. 15th, 2014 and lasts until Jan. 15th, 2015

2015
January 15th - last day to enroll for coverage effective Feb. 1st, 2015

*These dates are subject to change by Covered California. 

You cannot enroll for individual coverage in the Months of May through the end of year except for special circumstance like change in family status and job based healthcare.
I want to thank Micah Weinberg, PhD from Bay Area Council for helping me with this.
 

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I don’t usually talk about my company but being that Small Business California was involved in the creation of B Corps in California, I am pleased to tell you CAL Insurance is now a B-Corp. Just got word today that we passed the test for this designation!


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

REGISTER: GO-Biz CA Competes Workshops

Please find below an announcement of meetings and webinar regarding the California Competes Tax Credit program. There is special consideration for small businesses under $2 million in receipts.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

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Governor’s Office of Business and Economic Development (GO-Biz)



REGISTER TODAY
GO-Biz to Hold Statewide Workshops on California Competes Tax Credit
 

The Governor’s Office of Business and Economic Development (GO-Biz) will hold public workshops to solicit input on the draft regulations for the California Competes Tax Credit program, an income tax credit available to businesses that want to expand, relocate or stay and grow in California. At the workshops, GO-Biz will provide an overview of the enacting legislation, discuss the draft regulations and welcome feedback from the community. Additional details regarding the CA Competes program and the upcoming workshops can be found here.

Please REGISTER below for the workshop in your area.

San Diego Area – Dec. 17th 
10 a.m. to 12 p.m.
San Diego City College Corporate Education Center
1551 C Street
San Diego, CA 92101
Register: HERE

Inland Empire – Dec. 18th 
10 a.m. to 12 p.m.
Norton Regional Center
Inland Empire Economic Partnership Auditorium
1601 East 3rd Street
San Bernardino, CA 92408
Register: HERE

Los Angeles Area – Dec.19th 
10 a.m. to 12 p.m.
Glendale Community College
1500 North Verdugo Road
Glendale, CA 91208
Register: HERE

Online Webinar – Dec. 20th 
10 a.m. to 12 p.m.
Register: HERE

GO-Biz serves as California’s office for economic development and offers a range of services to business owners. Those services include attraction, retention and expansion services, site selection, permit streamlining, clearing of regulatory hurdles, small business assistance, international trade development, assistance with state government, important informational briefings and much more. For more information visit: www.business.ca.gov or contact Jorge.Jaramillo@gov.ca.gov.

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Affordable Care Act [ACA]

Over the last week I have found that there is a lot of misunderstanding about the ACA or lack of knowledge exist about the ACA. Let me state some information that may be important to you.

1. The ACA defines full time employees as 30 hours. If you have a group health plan you must offer coverage to  anyone that works 30 hours with some exceptions. Many small businesses in the past have defined full time workers as above 30 hours. This changes Jan 1st, 2014.

[Note: you can reduce the definition of full time to 20 hours but this is not required under ACA. You cannot provide on your group plan employees who work less than 20 hours.]

2. An employer cannot pay for an employee’s individual health policy and have the payment be on a pretax basis. This was not the case prior to ACA.
3. If you provide coverage for employees on your group policy you are not required to provide dependent or spouse coverage. Each case needs to be looked at closely but if you have less than 50 employees you may not want to offer coverage as that will disqualify the spouse and dependents from receiving any subsidies from Covered California. If you have 50 or more employees you are required to offer coverage to dependents.
4. If you have a Health Reimbursement Account (HRA) and your employees have money  in the HRA,  which provides coverage for some Minimal Essential Benefits,  the employee will not be eligible for subsidies in Covered California. This becomes effective Jan 1st, 2014.

[Note: Minimal Essential Benefits do not include Dental and Vision. These are called Excepted Benefits]

5. Individuals who purchase health coverage from Covered California and are eligible for subsidies receive the subsidy based on the Silver Plan. The individual  then has the option of purchasing a Bronze, Silver, Gold or Platinum with the Silver plan subsidy.

Under the Small  Business Health Option Plan [SHOP], the employer chooses the Metal level and the employee must choose the option available only at that metal level.

What questions do you have about ACA?

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Last week I sent out a survey about  employer health coverage. Thank you to all that responded. The most interesting results were about 15% of the respondents said they would be dropping their health insurance. Very few people responded to the question of whether they felt their employees would buy individual  coverage but everyone one that did did not think their employees would purchase coverage. 


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

Health Insurance Questions

I need your help in answering a few questions. Please take just a couple of minutes to answer. As I speak frequently about the Affordable Care Act I frequently get asked these kind of questions,

1. Do you provide health insurance to your employees?
2. Do you intend to keep group health coverage for your employees?
3. Do you provide for dependents?
4. What percentage of the insurance cost do you pay?
5. Do you plan to drop your health insurance?
6. If you haven’t provided health insurance do you plan to buy health insurance in 2014?
7. If you don’t provide coverage do you think your employees will purchase  health insurance as required by the Affordable Care Mandate?

 Thank you


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

Workers Comp. Increase/SHOP/Small Business Saturday

The Insurance Commissioner approved yesterday a 7.6% increase in workers compensation pure premiums effective Jan 1^st, 2014. The insurance companies are not required to take this increase as  they can file their own rates higher or lower. I have heard of companies not taking any increase, overall though I would expect most companies to take some increase. State Fund took a 6.5% increase for Jan 2014.

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Yesterday, Covered California previewed a soft launch of its small business group health product [SHOP]. You can see what options you have by  going to  www.coveredca.com.

Remember you can use an Agent/ broker who is certified. There is no additional cost for this.

Click this link to see the list of certified agents in California.

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November 30th is Small Business Saturday. The Governor has sent out a memo encouraging people to support small businesses around the state. He noted that 99% of the employers in California are small businesses and employ 52% of the state’s employees.

I usually get a call from a local radio station on Small Business Saturday so let me know what you are doing!

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

Remembering our 2012 Accomplishments/Women's Symposium

As we come to the closing of 2013 and I think about our accomplishments this year, I look upon our last year's success to see our growth. This year we have continued to advocate and assist small businesses throughout CA. We hope you find these emails to be of interest and we hope you all renew or join and tell other businesses owners and friends about Small Business California!

Accomplishments 2012

Small Business California (SBC) completed its 8^th annual survey of small business issues. There were 630 respondents and every county in California was represented. The top six issues were cost of healthcare, quality of public education, small business regulations, state infrastructure, access to capital, and state taxes.

SBC and the San Francisco Small Business Commission held a meeting in San Francisco about the new legislation creating B corps in California. There were 100 small businesses and Assemblyman Jared Huffman, the author of the legislature, discussed how this will benefit California small businesses.

SBC hosted a meeting in LA with 20 small businesses and under Secretary of Commerce Eric Hirschhorn regarding export controls. The purpose was for the Under Secretary to hear from small businesses how export regulations can be streamlined.

SBC hosted a meeting along with Elizabeth Echols, regional director of Small Business Administration, Christine Baker the head of California Department of Industrial Relations (DIR) and Joan Woodward from Travelers Insurance Company. Topics discussed were the foundation of DIR, what the SBA is doing for small businesses, especially in the area of access to capital and how Travelers is trying to help small business to disaster planning. There were 95 small businesses in attendance.

Worked closely with jobs and economic Development Committee in an economic development strategy for California small business.

Provided information and risk management techniques to protect California small businesses from cyber-attacks.

SBC working with Cal OSHA and State Farm developed a paper helping small businesses comply with the Injury and Illness Prevention Plan requirement. A meeting was held with small businesses in Oakland rolling out the plan.

SBC continues to work with Covered California and the California Endowment Foundation to get information on the Affordable Care Act out to small businesses around California. To that extent, emails are sent frequently to about 2000 small businesses around the state and presentations were made to small business around the state.

SBC provided information about AB 863 which reformed workers compensation in California. Presentations were made to Industrial Claims Association, Association of Workers Compensation Professionals, California Metals Coalition and the California Educational Forum.

Legislation

SB 863 – SBC supported this and brought together 24 associations. The bill was signed by the Governor and attended the signing events with the Governor in San Diego and Burbank.

AB 2408 – SBC strongly opposed the bill which would have eliminated the net operating loss carry back. SBC brought together 25 associations also opposing this bill. It did not get through the legislation.

SB 323 – This bill repealed the Beverly-Killea Limited Liability Act and put in place the Uniform Limited Liability Act. SBC got the author to amend the bill putting in place a grandfather clause which eliminated the need for about 604,000 LLCs from hiring an attorney to change their bylaws. The bill with amendments was signed by the Governor.

AB 1099 – This bill which provides that a regulation or order of repeal is effective on specified dates. It required the office of administration law to make a free copy of the full text of the Code of Regulations available on the internet. This bill was signed by the Governor.

SB 1510 – SBC sponsored this bill which modified the definition under the small business Procurement and Contract Act, to include additional conditions under which a certified small business or microbusiness is deemed to perform a commercially useful function.

Click here for all high priority bills that are SBC tracked. Many of these bills were testified on in their respective committees.

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Attention those in the food business in SoCal:

Join CAMEO at our December 3rd Women's Symposium at the Los Angeles Federal Reserve. 

It's going to be a great event - they've confirmed Evan Kleiman from KCRW's Good Food and Liza Braude-Glidden (photo left), Co-Founder and Creative Director of Beanfields Bean and Rice Chips as their keynotes!

Learn more and register: Download a flyer
 


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

"Micro-business Means Business"

California Association for Micro Enterprise Opportunity  (CAMEO)'s Board Chair Stacey Sanchez will be featured on KPCC's Crawford Family Forum.

Micro-business Means Business

Wednesday, November 20, 2013, 8:30 AM - 9:30 AM

474 South Raymond Avenue, Pasadena, CA 91105

For more info: http://www.scpr.org/events/2013/11/20/1227/micro-business-means-business/

The event will be a conversation about micro-business between KPCC reporter Ben Bergman and Stacey about the importance of micro-biz and how to support it.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

SHOP/Disabled Access

As you all know, Covered California's Small Business Health Options Program (SHOP) has been offline for quite awhile. We are being told it will launch November 19th. This is subject to change should the testing have a problem.        

You are going to hear a lot about December 15th being the last day to enroll for coverage beginning Jan 1st, 2014 in Covered California . While this is true for individual coverage it is not true for SHOP. You can enroll the last day of the month.

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Yesterday I received notice that I have been reappointed to the California Commission on Disabled Access. My appointment was by Senator Steinberg. I currently serve as Vice Chair. Are any of you being sued or have received a letter for lack of access? Is this a problem in your area?



Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

Online hacking/International Trade

It has come to my attention that someone is sending messages using my name to some of you asking to click on a link they identify as a “Google Secure Drive” to get a document. This is a lie.  When I pass my mouse over (not clicking) the top of the “click here” in the bogus email, I can see it goes to some unknown site.

While it does NOT seem that I have been officially hacked, instead they seem to have gotten a hold of an email list, our IT dept. will be looking into it and have already changed my password for all the websites that I have used my signature (i.e. Mailchimp, Blogger, etc.).

Please do NOT open emails like the one below. My only emails are Shauge@cal-insure.com 
and Shauge@smallbusinesscalifornia.org.

There are more and more of these.  Please be cautious of this. Hackers are now sending this kind of message out that locks your data until you pay to unlock it.  These new versions of viruses are going to make criminals rich and will promote copy cats. This makes good data practices more important than ever. Never allow an unexpected application to open when prompted, always download content from reputable sources and if your gut says don’t click it…don’t.

Thank you  to those that advised me of this.
 
From: Scott Hauge obllad@aol.com
Date: Tue, 5 Nov 2013 10:02:17 -0500
To: Undisclosed recipients:;
Hello,
Please kindly review the document i uploaded for you on google secure drive.
http://bit.ly/1alJaz2>Click Here for immediate access

Best Regards

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188
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For those of you in the San Jose area here is a great opportunity to meet one on one with people that may be of help to you.

Here is information on the “Expanding Horizons” international trade and investment event in San Jose on Wednesday, November 13^th. Registration begins at 7:30am., with welcoming remarks at 8:45am and the conference program at 9am. The schedule of presentations in here:
 
http://opicevents.com/index.php?id=4

The opportunity to sign up for a one-on-meeting with the presenter of your choice, after the lunch, is perhaps the greatest advantage of the conference.

The $50 registration fee includes coffee and pastries in the morning as well as the lunch.




Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

Blue Shield Tax/60 Day Benefits Requirement/SBA Lending

I just found out yesterday that Blue Shield will be charging a 3.8% tax on small group's [under 50 employees] health insurance premiums effective Jan 1st, 2014. This will apply to existing policies inside and outside of Covered California. What's interesting is that large groups and individuals will not be charged. It doesn't seem right to me but that is what it is [and it raises some questions].There may be another company doing this but I have not confirmed their name.

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AB1083  has passed the legislature and been signed by the Governor requiring that all health benefits provided by employers not exceed a 60 day waiting period for enrollment. This differs from the ACA which has a 90 day waiting period. This will take effect January 1st, 2014
 
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The SBA has had a strong lending year. See below for numbers from the Acting Administrator.
 


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

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Another Strong Year for SBA Lending in FY 2013

by Jeanne Hulit, Acting SBA Administrator

Small businesses are the engine of our economy, and they create about two out of every three net new private sector jobs in the United States. At the U.S. Small Business Administration (SBA), our mission is to make sure that small business owners have the tools they need to do what they do best—providing great products and services, creating jobs and serving America’s communities in the process.

At SBA, one of the most critical things we do is make sure that small business owners have access to the capital they need to start and grow their business. Since President Obama took office, SBA has supported more than $126 billion in lending to more than 260,000 small businesses and entrepreneurs. This includes two record years of delivering over $30 billion annually in loans in FY 2011 and FY 2012.

FY 2013 has been another strong year for SBA lending, cumulatively supporting more than $29 billion in lending to America’s small businesses. We had an incredibly successful year and are proud of the work we did to support small businesses in this country.

Let’s take a quick look at some relevant numbers:

• 7(a) loans, SBA’s flagship lending program that can be used for most business expenses including working capital, had a strong year—supporting $17.9 billion loans to more than 46,000 small businesses in FY 2013.
• The Small Loan Advantage (SLA) program, which is a key 7(a) loan initiative designed to expand access to loans under $350,000, was one of our biggest success stories. SBA has significantly reduced paperwork for the SLA program and expanded our pool of lenders—these changes have resulted in a more than 300 percent increase in SLA loans and an over 700 percent increase in the number of lenders using the program. In FY 2013, SBA backed almost 5,000 loans for nearly $745 million through the SLA program.
• CAPlines, our program that provides working capital lines of credit designed to help small businesses with their short-term working capital needs, made 682 loans for more than $500 million. In two full fiscal years since we re-designed the program, we have made 1,200 loans after only making 1,300 over 15 years—a significant increase that speaks to the success of this program.
• In FY 2013, SBA also supported more than 7,700 504 loans, which provide small businesses with long-term, fixed-rate financing to acquire real estate and major fixed assets, for a total of more than $11.7 billion. Although this is a slight decrease compared with FY 2012, this decrease demonstrates the importance of SBA’s 504 Refinancing Program, which temporarily allowed small business owners to use our 504 program to refinance commercial real estate and other fixed assets and gave SBA a record year for 504 lending in FY 2012. That program was authorized by the Small Business Jobs Act and expired in 2012, but a one year extension of the program was included in the President’s FY14 budget.

This is just a snapshot of SBA’s accomplishments in the fiscal year that just ended. We are proud of the work we are doing in helping America’s small businesses grow and thrive. Because at the end of the day, our nation’s small business owners and entrepreneurs know what to do—they just need the tools to do it—and that’s where SBA fills a critical role in helping small business owners and entrepreneurs achieve their dreams. And our neighborhoods, communities, and economy are stronger as a result.

For more information about SBA programs and services, visit www.sba.gov. For contact information for your local SBA office, visit www.sba.gov/localresources/index.html.
 

SBA Waives Fees/EDD Audits (workers compensation tests of an independent contractor)

Some very exciting news that has not gotten much coverage -- The SBA is waiving fees on loans up to $150,000.  The current fee to the bank is 2% which the bank passes on to the borrower. The way this works is that a loan of $150,000 is  85%  guaranteed by the SBA. So the business would have paid $2550. Seems strange to me that the SBA is not getting this message out.

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On Friday I sent an email talking about EDD stepping up audits on independent contractors. See below the Division of Labor Standards discussion of independent contractors. What is troubling is that there is no standardized definition (see 4A and 5Q below). The IRS has somewhat of a different definition too. How can a small business owner, who is trying to play by the rules, understand if they truly have an independent contractor or an employee with varying definitions? Let me be clear, I know there is abuse by some businesses and I have no problem going after these people but the state should standardize the definition among all agencies and the IRS.
 


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188 

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[Division of Labor Standards Enforcement (DLSE)]

Independent contractor versus employee

Not all workers are employees as they may be volunteers or independent contractors. Employers oftentimes improperly classify their employees as independent contractors so that they, the employer, do not have to pay payroll taxes, the minimum wage or overtime, comply with other wage and hour law requirements such as providing meal periods and rest breaks, or reimburse their workers for business expenses incurred in performing their jobs. Additionally, employers do not have to cover independent contractors under workers’ compensation insurance, and are not liable for payments under unemployment insurance, disability insurance, or social security. The state agencies most involved with the determination of independent contractor status are the Employment Development Department (EDD), which is concerned with employment-related taxes, and the Division of Labor Standards Enforcement (DLSE), which is concerned with whether the wage, hour and workers’ compensation insurance laws apply. There are other agencies, such as the Franchise Tax Board (FTB), Division of Workers’ Compensation (DWC), and the Contractors State Licensing Board (CSLB), that also have regulations or requirements concerning independent contractors. Since different laws may be involved in a particular situation such as a termination of employment, it is possible that the same individual may be considered an employee for purposes of one law and an independent contractor under another law. Because the potential liabilities and penalties are significant if an individual is treated as an independent contractor and later found to be an employee, each working relationship should be thoroughly researched and analyzed before it is established. There is a rebuttable presumption that where a worker performs services that require a license pursuant to Business and Professions Code Section 7000, et seq., or performs services for a person who is required to obtain such a license, the worker is an employee and not an independent contractor. Labor Code Section 2750.5

 

1.	Q.	How do I know if I am an employee or an independent contractor?
	A.	There is no set definition of the term "independent contractor" and as such, one must look to the interpretations of the courts and enforcement agencies to decide if in a particular situation a worker is an employee or independent contractor. In handling a matter where employment status is an issue, that is, employee or independent contractor, DLSE starts with the presumption that the worker is an employee. Labor Code Section 3357.  This is a rebuttable presumption however, and the actual determination of whether a worker is an employee or independent contractor depends upon a number of factors, all of which must be considered, and none of which is controlling by itself. Consequently, it is necessary to closely examine the facts of each service relationship and then apply the law to those facts. For most matters before the Division of Labor Standards Enforcement (DLSE), depending on the remedial nature of the legislation at issue, this means applying the "multi-factor" or the "economic realities" test adopted by the California Supreme Court in the case of S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341. In applying the economic realities test, the most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are: 1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal; 2. Whether or not the work is a part of the regular business of the principal or alleged employer; 3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work; 4. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers; 5. Whether the service rendered requires a special skill; 6. The kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; 7. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill; 8. The length of time for which the services are to be performed; 9. The degree of permanence of the working relationship; 10. The method of payment, whether by time or by the job; and 11. Whether or not the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests. Even where there is an absence of control over work details, an employer-employee relationship will be found if (1) the principal retains pervasive control over the operation as a whole, (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288) Other points to remember in determining whether a worker is an employee or independent contractor are that the existence of a written agreement purporting to establish an independent contractor relationship is not determinative (Borello, Id.at 349), and the fact that a worker is issued a 1099 form rather than a W-2 form is also not determinative with respect to independent contractor status. (Toyota Motor Sales v. Superior Court (1990) 220 Cal.App.3d 864, 877)
2.	Q.	The person I work for tells me that I am an independent contractor and not an employee. He does not make any payroll deductions or withholdings for taxes, social security, etc., when he pays me, and at the end of the year he provides me with an IRS form 1099 rather than a W-2. By paying me in this manner does it mean I am automatically an independent contractor?
	A.	No. The fact that a person who provides services is paid as an independent contractor, that is, without payroll deductions and with income reported by an IRS form 1099 rather than a W-2, is of no significance whatsoever in determining employment status. Your employer cannot change your status from that of an employee to one of an independent contractor by illegally requiring you to assume a burden that the law imposes directly on the employer, that being, withholding payroll taxes and reporting such withholdings to the taxing authorities.
3.	Q.	Does it make any difference if I am an employee rather than an independent contractor?
	A.	Yes, it does make a difference if you are an employee rather than an independent contractor. California’s wage and hour laws (e.g., minimum wage, overtime, meal periods and rest breaks, etc.), and anti-discrimination and retaliation laws protect employees, but not independent contractors. Additionally, employees can go to state agencies such as DLSE to seek enforcement of the law, whereas independent contractors must go to court to settle their disputes or enforce other rights under their contracts.
4.	Q.	When I started my current job my employer had me sign an agreement stating that I am an independent contractor and not an employee. Does this mean I am an independent contractor?
	A.	No. The existence of a written agreement purporting to establish an independent contractor relationship is not determinative. The Labor Commissioner and courts will look behind any such agreement in order to examine the facts that characterize the parties’ actual relationship and make their determination as to employment status based upon their analysis of such facts and application of the appropriate law.
5.	Q.	How can it be that the Labor Commissioner determined I was an employee with respect to a wage claim I filed and won, and the Employment Development Department (EDD) determined I was an independent contractor, and denied my claim for unemployment insurance benefits?
	A.	There is no set definition of the term "independent contractor" for all purposes, and the issue of whether a worker is an employee or independent contractor depends upon the particular area of law to be applied. For example, in a wage claim where employment status is an issue, DLSE will often use the five-prong economic realities test to decide the issue. However, in a separate matter before a different state agency with the same parties and same facts, and employment status again being an issue, that agency may be required to use a different test, for example, the "control test," which may result in a different determination. Thus, it is possible that the same individual will be considered an employee for purposes of one law and an independent contractor under another.
6.	Q.	As an employer, what obligations do I have to purchase Workers’ Compensation Insurance or comply with other labor laws for persons classified as independent contractors?
	A.	Employers often improperly classify their employees as independent contractors to avoid paying payroll taxes, minimum wage or overtime, or complying with other wage and hour requirements such as providing meal periods and rest breaks, etc.  Additionally, employers do not have to cover independent contractors under Workers’ Compensation Insurance.  However, because potential liabilities and penalties are significant it is important that each working relationship be thoroughly researched and analyzed before classifying an individual as an independent contractor and not an employee.  You should understand that the DLSE presumes that the worker is an employee (Labor Code Section 3357).  However, the actual determination of whether a worker is an employee or independent contractor depends upon a number of factors which must be considered. Consequently, it is necessary to closely examine the facts of each relationship and then apply the law to those facts. The most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker, the work to be done and the manner and means in which it is performed.
7.	Q.	What can I do if I believe my employer has misclassified me as an independent contractor and as a result am not being paid any overtime?
	A.	You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner's Office), or you can file an action in court to recover the lost overtime premiums. In both situations, it will first be necessary to determine your employment status, that is, employee or independent contractor, before the issue of overtime can be addressed and decided. Additionally, if it is determined that you are an employee and you no longer work for this employer, you can make a claim for the waiting time penalty pursuant to Labor Code Section 203.  Eligibility for this penalty is dependent upon your employment status, as independent contractors are ineligible for the waiting time penalty.
8.	Q.	What is the procedure that is followed after I file a wage claim?
	A.	After your claim is completed and filed with a local office of the Division of Labor Standards Enforcement (DLSE), it will be assigned to a Deputy Labor Commissioner who will determine, based upon the circumstances of the claim and information presented, how best to proceed. Initial action taken regarding the claim can be referral to a conference or hearing, or dismissal of the claim. If the decision is to hold a conference, the parties will be notified by mail of the date, time and place of the conference. The purpose of the conference is to determine the validity of the claim, and to see if the matter can be resolved without a hearing. If the claim is not resolved at the conference, the next step usually is to refer the matter to a hearing or dismiss it for lack of evidence. At the hearing the parties and witnesses testify under oath, and the proceeding is recorded. After the hearing, an Order, Decision, or Award (ODA) of the Labor Commissioner will be served on the parties. Either party may appeal the ODA to a civil court of competent jurisdiction. The court will set the matter for trial, with each party having the opportunity to present evidence and witnesses. The evidence and testimony presented at the Labor Commissioner’s hearing will not be the basis for the court’s decision. In the case of an appeal by the employer, DLSE may represent an employee who is financially unable to afford counsel in the court proceeding. See the Policies and Procedures of Wage Claim Processing pamphlet for more detail on the wage claim process procedure.
9.	Q.	What can I do if I prevail at the hearing and the employer doesn’t pay or appeal the Order, Decision, or Award?
	A.	When the Order, Decision, or Award (ODA) is in the employee's favor and there is no appeal, and the employer does not pay the ODA, the Division of Labor Standards Enforcement (DLSE) will have the court enter the ODA as a judgment against the employer. This judgment has the same force and effect as any other money judgment entered by the court. Consequently, you may either try to collect the judgment yourself or you can assign it to DLSE.
10.	Q.	What can I do if my employer retaliates against me because I thought I was misclassified as an independent contractor and objected to not being paid overtime?
	A.	If you are an employee and your employer discriminates or retaliates against you in any manner whatsoever, for example, he discharges you because you question him about your employment status, or about not being paid overtime, or because you file a claim or threaten to file a claim with the Labor Commissioner, you can file a discrimination/retaliation complaint with the Labor Commissioner’s Office. In the alternative, you can file an action in court against your employer. If, on the other hand it is determined that you are in fact an independent contractor, DLSE cannot assist you as it does not have jurisdiction over independent contractors, and you would have to go to court to enforce your rights.

Workers Compensation/ Covered California

Yesterday the Workers Compensation Insurance Rating Bureau Governing committee increased its recommended increase for Jan 1 2014  from 7.8% to 9.6%. This would make the average rate for workers compensation to  $2.75 per hundred dollars of payroll. This will now go to the Insurance Commissioner for his recommendation. I am not sure what the final increase will be as the Insurance Commissioner can override this and each insurance company can file their own rates. I think I can safely say that rates will be going up but the increase will vary  depending  on the type of business.

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The Board of Covered California will be meeting today. I am curious if any of you have  visited the Covered California website recently. What was your experience? Have any of you enrolled? The list of doctors is still not available creating a problem for many. The Federal Exchange program is really a mess and questions are being raised about whether it will be functioning for January 1, 2014. There also is discussion of pushing back the individual mandate because people may not be able to enroll by December 15.

Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188