Crowd Funding/ Workers' Compensation/ ACA

I have written frequently about our crowd funding bill. In a previous email I sent I  said we are introducing this bill again this year. The author is Assemblyman Chiu and  Senator Allen will be the coauthor.  The bill number is  AB2178.  As you may recall this bill will eliminate the requirement of a portal and replace it with oversight by the Department of Business Oversight . This will save  small businesses the 5 to 10%  which the portal charges. The amount that can be raised  is up to $1 million and is subject to a $5000 limit per year  for any investor.

The bill will also allow the business to solicit over the internet, which  is prohibited under the federal  JOBs Act.

We believe this will really help start up and expanding small businesses who have no access to venture capital and who have difficulty getting money from other sources like banks.

On a more negative note our  proposed bill to eliminate questions on the industry workers’ compensation application has died. The questions are:  

Do you have any employees over 60 ?

Do you have any employees with physical handicaps?

Basically we could not find an author as  some of  the California workers compensation carriers opposed the bill. Being an election year legislators were afraid of losing insurance company contributions. I don’t think the insurance companies would go public with their opposition .

It should be noted that State Fund - the largest workers compensation carrier in California - does not ask  these questions and has stated to me that they do not need this information  for underwriting.

I received a call from a client yesterday asking if he had to provide health insurance  for his employees under the Affordable Care Act.

He will have just over 50 employees. He was told by an insurance broker he didn’t have to because California recently increased the definition of small businesses to less than 100 employees.

It is true California  did increase the definition of small businesses  to less than 100 employees but it  did not eliminate the Affordable Health Care requirement  of employers with 50 to 99 employees to either provide health insurance or pay a fine.

He also said he had a 125 plan and paid 35% of his employees individual health l  coverage on a pretax basis. This is illegal. An employer cannot pay premiums for an employee’s individual  coverage and have it on a pretax basis.  This includes 125 plans and standalone Health reimbursement accounts. There are heavy fine for doing so.

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