Prefer to read? (Transcript)
Speaker 1 00:12 Good morning everyone. Welcome to business and legal talk with Leo and Claudine. Today is Saturday, March 9th. How are we doing, Claudine? We are alive and well. Great. Well, so I am your host Leo Landa Verde. I am a CEO and on a fractionalized, uh, accounting firm and serving clients from a really all over in California and have fun doing it. And, uh, in my cohost I was to tell CLA, you know, Claudine, you know, we need to remind everybody where we are. So what we do. All right. I’m a business and real estate attorney located in Turlock, our business practice fans, pretty much all of the central Valley. Uh, occasionally we do go into the Bay area and if we, uh, have a case over there and, um, we are helping people stay in business, stay alive, and we came together because we want to help businesses be profitable in sustainable and sustainable.
Speaker 1 01:03 And that’s really why we have this show. Um, you know, this is really, wow, we’re, we’re, this is our fifth or sixth show. I think we’re six now. This is six shows. We’re growing up. We didn’t know what was going on, right? So we’re loving this format of radio and, uh, we already had some callers. So if you’re listening to this, um, really what we’re doing, this show, it’s about, there’s a lot of misinformation out there. You know, about how to run a business, what to do with the running of a business and really protection as a business owner, you know, who do you go to? W where do you have questions? And I think there’s a lot of fear about reaching out because you don’t know, you reached out to the wrong person until you figured out it was the wrong person. Yeah. There’s not like a, you know, we have reviews and there, there are reviews and stuff like that, but by and large there’s a fear of reaching out and not sure what it’s going to cost.
Speaker 1 01:53 Right. And you know what, at the end of the day, um, you, you really at, at, it comes a point in time in your business, you really got invested having the right advisors in your team. Our goal with this show is to give you as much as we can because it’s really not about the money. It’s about if you’re successful and you’re profitable, you will have the money to invest in those advices you absolutely need to have on your team. Absolutely. So with that said, we have a gray show for you today. I mean there is a lot, I mean I’m looking at 25 pages worth of stuff’s think tanks, the Euclidean and we can talk all day about this subject today. We can talk for weeks about the subject. So you want to tell us what we’re talking about today. We’re going to try to jump into, um, some of the new stuff that’s happening on the employment labor side. And so right now we’ve got a lot going on and this is without question one of the most complicated catered areas of life, the most complicated area of business for business owners. We love our employees. Our employees are folks that we rely on and, and oftentimes become part of our family. But it’s a very complicated area of law and their rules are changing on a daily
Speaker 2 03:00 basis. I’m certainly on an annual basis and some new employment laws come on board and they’ll be implemented in July and some will be implemented in January. And you know, it’s just sent. Then we’ll have rulings from the court that’ll be, you know, random. And if you’re not watching that and you know, a lot of business owners are really not watching what the appellate court’s doing or you know, perhaps the California Supreme court is doing, cause we watching reruns of France. That’s right. Friends or we have so much time available writing on your age, age category could be the Brady bunch, could be the Partridge family. I don’t really know. Come on, we’re talking to business owners, right? Who work 14 hours a day, right? When did they have time to go research all this stuff. You don’t, you honestly don’t. And we get caught with it.
Speaker 2 03:44 Right. You know, even those of us who this is what we do. And, and we, um, you know, certainly in, in our office, and we’ve talked about this before, we are a very collaborative office and so we, when when one of us comes across something or you know, happens to, you know, have read a, an appellate court decision and you know, we rush in to the other one. In fact, I was in heartbeat’s office this morning. I had come across a really, really good ruling. Um, it was a well thought out and well reasoned ruling from the appellate court on a subject that we deal with all the time, which is private attorney general act, also known as . Um, and it was just a well well-reasoned and rationalized ruling, um, on how to calculate, um, penalties when you, when you’re dealing with those, the PAGA claims.
Speaker 2 04:30 It was just as really good. And I printed it out and I had like these 10 pages and I go running into his office and I’m like, look, this is like really good. You’re really gonna enjoy reading this. And I’m thinking to myself, God, we must be really weird because we get excited about that and we really enjoy reading. I’m sure I could pull 10 random people off the street and hand it to any one of them and they’d probably just throw it in the garbage and want to cry. Right. And so I think, you know, why don’t we wet the listener’s appetite with some of the things you know? And you know, we want to, everything that we do and when we talked to our audience, we know where you’re at. So you are not attorneys, you’re not a business analysts or financial analysts or accounting professionals.
Speaker 2 05:10 But we want to distill this in the end. And probably the easiest way to understand it, some of the things that we’re going to be talking about today can be very heady. Yes, agree. Yes. We wanted this going to be careful. We have to be careful. So you make sure that you get, if you get one thing out of listening to us today, we’ll be grateful for it and you’ll be grateful for it. Absolutely. And if there’s anything that we talk about today that you maybe you’re confused about or maybe you’re not really sure about or you’re not, yeah, you’re not sure if it may be, does it apply to me? Please call. Because what we’re doing is we’re trying to provide some general information. We’re trying to perk up everybody’s ears. Let’s, let’s think about these things. But this is certainly not, um, qualified advising. And I wanna make that clear. And I think, I think you as well. Um, we’re giving advice in general terms and we’re kind of talking about things in general terms. Um, but this is certainly anything that you think might apply to you. Just give us a call, go to our website, you can contact both of us through the website. It’s, it’s easy. It will get emails. So this
Speaker 3 06:09 what, what, where should, if somebody has a question after the show, what number should they call in your office?
Speaker 2 06:15 Four two two Oh nine area code four two seven 2200. And if you have any
Speaker 3 06:20 question about, you know, their parts that, cause we, Claudine and I, we compliment each other. There are things that I come, you know, and you know, you can call my office five, five, nine two Oh seven three one four eight and more on that. Um, you know, in our websites, you know,S H E R R O n-law.com very easy. S H E R R O n-law.com in in ours is a Greenland as in the country of Greenland, G R E N L a N D HQ for headquarters.com. All right, so, so let’s, do you want to talk about some of the specific up, cause I see a lot of content here, SB 1300 and do you want to just,
Speaker 2 06:56 yeah, let’s go just over some of the basic ones that probably apply to a lot of people out here. Um, and these are some of the new employment regulations that have come forward this year. 2019. Um, one of them is a SB 13, 1343 and it’s expanded harassment training requirements. And it used to be that, um, companies with 50 or more employees, um, only were the ones that had to worry about it and they had to provide, um, sexual harassment training, um, to all supervisors and to EV for every two years. Um, and now that’s changed and we’re looking at now employers who have five or more employees must provide at least one hour of training to all non supervisory employees. That’s huge. That’s huge. That’s virtually every small business.
Speaker 3 07:43 I mean, I don’t know if you guys caught that for a long time. It was 50 plus, right? Yeah.
Speaker 2 07:48 Um, a lot of, a lot of labor codes were only affected 50 or more employees. I mean, this hasn’t happened. This is already law. This is, well, it’s, no, it is law, but it doesn’t become effective until January one, 2020. So we’ve got a year to get ready to implement this, but as of January one, 20, 20 every two years thereafter. Okay, I need to write this down cause that affects me well, by January one, 2020.
Speaker 3 08:18 So from that day forward, if you have five employees or more you subject
Speaker 2 08:24 let me clarify you, you must provide at least one hour of training to all non-supervisory employees by January one 2020. So you have January from January one, 2019 this year. We’re gonna start doing it now this year. Well that thing’s for Clara and then every two years thereafter. So, um, of course this is going to be, we know added costs for business owners and there’s nothing you can do about it. But what is the cost of not doing it? Well, the, the cost, anytime that you violate the code and each labor code will not each ones per se, but labor codes come with different penalties. And then there’s
Speaker 3 09:03 okay. Hey, guess what? We’re having so much fun with time for a break. So you’re listening to business illegal talk with Leah and Claudine. Uh, stay tuned. We’ll be back in 68.
Speaker 4 09:15 are back
Speaker 3 09:48 listening to business and legal talk with me, you and Claudine. I am your host Lee Yolanda Verda and my cohost is Claudine. Claudine, you’re back on.
Speaker 2 09:57 I am back on, I’m back on. So we were discussing some of the new regulations that have come about in the employment realm. Um, we have, um, another one that is, um, is relative to salary history, um, when employers are interviewing employees. Um, back in 2017 we had some, some regulations that came about that said, um, that we had to be very careful when we were, um, talking about salary history. Um, we’ve also got some, um, AB 2282 and so we’ve had some clarification on that. And the legislation prohibited employers from asking job applicants for salary history information and required employers to give applicants the pay scale for a position upon reasonable requests. And that’s good. I mean, I, I don’t know how many times I’ve interviewed for a position over, you know, quite a lot of years. Um, but you’re always at the, if it’s not published, you’re always kind of wondering like, and then you’re not sure. And then they say, well, send me your S your salary requirements and then you’re afraid to put it down because, or you want to put a range because you’re afraid that if I put a salary of 50,000 on my application and they’re in their minds, they’re only going to pay 40. Do they just take my resume and throw it away?
Speaker 3 11:13 Well, I need to, I need to interject because I’m actually asking questions on behalf of business owners. I am a business owner myself. So if I’m interviewing somebody across from me in the past, I was able to say, Hey, so what are you looking to make? Right?
Speaker 2 11:27 Well, you can ask them, um, what you can ask them what they want to make. You just can’t demand that they provide their history.
Speaker 3 11:36 Okay. So different. So in the past, what I would do, this is in the past I would say, okay, so this job that you did this, this company ABC, and you were there for three years, what, what was your, um, you know, how much do you end up making? How much were you making when you were there? Right, right.
Speaker 1 11:53 And, and, and say, you know, X amount of dollars or, or it would be put on a resume or it would be put on an application. Yeah. You fill out the application, there’s a box that it says darting hourly rate and the hour or salary, salary. A lot of employers do use that as a way to gauge somebody’s growth over a spectrum of time. So if you, if you were in say the CPA world and you started off a, you know, at, you know, 50,000 a year and you were at a job that by the time you left that job, three years later, you had, you know, increased to 65,000 a year, that would be an indication that you were being rewarded for growth and you must have presented correct assumption. Right. And now we’re just not able to, to demand that. What’s, what’s the deal?
Speaker 1 12:37 What’s something happened? I mean like honestly, honestly when it comes to employment law and California, there’s oftentimes rarely rhyme or reason. There’s, we have so many laws and we have so, so many little things that other States don’t do and that are so different from federal. Um, California is a very, very pro employee state. And I’m really conflicted about it because I represent business owners. We work hard to keep them compliant, we work hard to help them stay educated. We also see employers doing it so wrong that it makes me just, it’s frustrating to me cause I have these clients who are working so hard trying to do it right. And yet there are employers out there who are just doing it so raw and intentionally and you know, intentionally not providing wage statements and intentionally not paying overtime. We come across him and it’s some big companies.
Speaker 1 13:34 Okay. And it’s frustrating, but you’re going to have those outlier employers who are out there to steal from employees. But because of the small minority, all of us pay, right? But if we didn’t have these rules right, you know, I think it would be worse. And so w when I see these really egregious, um, behaviors on the part of employers, and I think to myself, well that’s exactly why we have all the regulations, because you couldn’t regulate yourself and you couldn’t get, your employees are always going to be the backbone and the lifeblood of your business. And making peace with that and not trying to take advantage of them is how are you going to be successful if you’re just tuning into this show right now and you’re driving, well, you’re listening to business illegal talk with Leah and Claudine and Claudine is a, an amazing attorney with multiple areas of expertise.
Speaker 1 14:21 One of them is, it’s a labor law, which we’re talking about today and what I help customers or our business owners is really how do you navigate the treacherous waters of growth in a company and do it so profitably. So if you’re just thrown into the show, we come from both angles. He’s like getting, yet she comes in, Claudine is an expert at making sure that you’re sustainable, that you are going to be able to be around and you’re not getting sued. We haven’t even talk about money yet on this phone. Oh no. And I’m making sure that you’re profitable, but if you made $1 million worth of profit in one year, but then you have to pay it off with a wrongful
Speaker 2 14:52 termination lawsuit and then you wipe out and it’s going to cost you a million, you may zero. Well that’s not what we’re about. We want to help you. So if you just do an end, that’s what we’re talking about ladies. Ladies, what do you call this? These are the new regulations that came about this year. We had another one, ABC 1976, that requires employers to make reasonable efforts to provide a room other than a bathroom for, um, breastfeeding parents. So, and that’s kind of interesting cause that that was kind of the quote unquote private place that employers could use to set up a, you know, a comfortable spot. Um, and now they’re, they’re wanting us to, um, make reasonable efforts. And whenever we start talking about what is reasonable, you know, that’s just such a gray area. I mean literally attorneys can and do go on for days over debating over what’s reasonable shades of gray.
Speaker 2 15:45 That’s exactly it. That’s exactly it. So, you know, I always tell my clients, you know, and, and make an effort. So if you have an extra room and it’s not being used, go ahead and use it. If you don’t have it, if you would have to build something onto your building or you know, something like, well that would probably be a little bit unreasonable. It’s not too hard to figure out, just take an effort. I mean, some of it is you would think is sort of common sense, right? Yeah. And I can see why, you know, being a mom, um, I wasn’t in the employment force at the time that I was raising my, my infants, but I can see how a mom maybe doesn’t want to sit necessarily in a bathroom with, you know, people walking in and out, toilets flushing and yeah, it’s a bathroom.
Speaker 2 16:26 Come on. So I mean, it’s not an, it’s not a horrible idea. Um, it’s not a horrible regulation, but you know, be aware of that. That’s some, and these are little things that people don’t necessarily know and unless somebody is there to tell them or until you get sued. And that’s usually when, when people find you don’t want to know then yep. Cause what else is what is coming down the pipeline. And you know, I think that’s pretty much it. The probably the biggest thing that happened last year was not a regulation but more, it was a Supreme court decision. And, um, the Supreme court in the state of California, not, not the federal Supreme court, but our, our national, or I mean, excuse me, our state Supreme court, um, came up with, um, a ruling that has pretty much rocked employee employment law, um, from industry to industry.
Speaker 2 17:15 And that was called what we refer to as the Dynamex decision. And it’s Dynamex operations West versus the superior court of Los Angeles. And what the Dynamex decision did was, um, it changed how we look at independent contractors. And independent contractors have been the lifeblood in many, many, many ways of our economy. Um, if you think about real estate offices and you know, all the real estate agents are independent contractors, realtors and hairdressers, they oftentimes rent their station. And a lot of people like to be independent contractors. We have used independent contractors as paralegals. Um, there’s times where we have a heavier workflow and, and we will hire independent contractors. You know, there’s, there is so many different industries. Um, and, and yes, people have tried to use the independent contractor status to get around paying, um, you know, payroll tax and so forth and they think it’s cheaper and, but there is a real big section of our society that does very well and enjoys being independent contractors, likes to not have the regulation of showing up at eight o’clock in the morning or taking a break at 10 and you know, lunch at 12 and so forth.
Speaker 2 18:27 And they, they are able to set their own schedule and this decision has completely set it all on its head.
Speaker 3 18:33 So interesting thing that you mentioned that unrelated, you know, we didn’t know this week and we were going to be talking about this like I didn’t know two weeks ago, but I was reading a something in the news about, uh, this is as having a ripple effect across the country. And there was this, this lady who was a hairdresser, uh, who, who there were seven of them and then as she was making X amount of dollars and she had freedom, she would come and go, um, show up to, to, to, to do the, do her hair appointments. And she would go, she wasn’t in the, she was a 10, 99 was treatise as their 99 independent contractor. Something happened. And then later she said that her employer turned all of seven of them into . Yep. But what happened was that she was getting paid, um, X amount per hour as an independent contractor. Right. And then she would make X amount of dollars because she would have a plant because she would come, she would, whether it is three, $400 a week, well that got cut in half the minute she was, she was so later, she was working the same amount of hours once she was a w two employee, but making half as much and the employer had to regulate more and they have to pay the employers. So was, it’s tough to figure out who’s a winner.
Speaker 2 19:45 It really is. And, and, and honestly, I think there’s some responsibility on the contractor or employee. If the contractor wants to be an employee, then they need to take the effort to go find the job that makes them an employee as opposed to being an independent contractor. I mean, as an employee you do have a choice. You have a choice, you know. Um, there are benefits and I know from working with contract, um, independent contractors in my own industry, those benefits are oftentimes surround schedule and demands. Independent contractors can come in at nine if they want to come in at night or they can come in at not at all because they’re free from country cause they’re free from control. Haven’t even gotten to that point. Right. And so in my case, we would often, you know, we work by assignment and we would say, well, you know, we have, you know,X , Y and Z that needs to be done.
Speaker 2 20:41 Or is it something you, you’re some project and we have companies that, there are companies that provide paralegal services. There are companies that w w one legal is probably the most common. Um, they provide legal services. They will file documents for you. They will, um, pick up documents. If we need documents coming from the courthouse, we can call one legal and you know, make an order and they’ll run in and get it for you and send it. So, um, this is going to really rock it because what the court has done now is, is taking it down from what the, the balancing test that we used to have, which, you know, had, you know, a number of different factors. And we would do this balancing test on, you know, does, is they’re controlled by the employer. Does the employer provide the equipment? Does the employer provide the education?
Speaker 2 21:30 We’ve talking about about a year or so, two years ago, right? Well, this is what it’s traditionally been. The Barela tests came about 1989. So it’s, and it’s similar to the factors that the IRS uses this balancing test. And now we have the ABC test, which is literally, when did ABC, when did it become effective? Do you know? The court ruled on an April 30th of 19, uh, 2018. So he became law then. Well, it became a case precedent. So it says through case precedent, it became how we now do things. The IRS took that and said, Nope, this is just state. This is, this is just the state of California state of California is the state of California. And this, this is modeled after another state. Um, but, but this is not what the feds do. This on a federal level. This is not at all what the facts are.
Speaker 2 22:21 Interesting. Um, but now what we do is the first prong of the ABC test is that the worker is free from the control and direction of the hiring entity in connection with the performance of work. Not too different than what we had. It’s the second prong that actually is the killer. And I think was the B portion. This is it. This is B. um, and I think this is what actually, um, kills everybody is that the worker performs work that is outside the usual course of the hiring entities business. And that means, wow, I can’t hire a contract paralegal because they’re not performing something completely different than the type of business that I perform. So I can hire a plumber and he would not, or she would not be an employee. You can hire an independent contractor account because that’s what I do, right? That’s the main thing of, of business.
Speaker 2 23:11 So, um, and the third prong is that the worker is customarily engaged in an independently established trade occupation or business of the same nature. And that’s not too different. When we worked with independent contractors prior or we were advising clients, we would always want the independent contractor to have their own business license, established their own insurance and yeah. And ensure that they invoiced us or, or they invoice the client that the client wasn’t paying them. Like payroll happens that, that we were actually receiving an invoice. Um, but this ABC test is really, really throne, um, businesses and, and, and I’ll tell you right now, probably 80% of the businesses in California don’t even know this exists, you know, until they get
Speaker 3 23:55 crazy. Right. It’s crazy, right? It just, that’s why it’s a hot area of litigation. So, you know, the way I had to understand it, cause it took me a while, even for me, and I do this for a living to like wrap my head around, it was like the whole thing about the restaurant in the, and the cook, right? Right. So if you are a restaurant and you produce food, right, what would be powerful doing business will be you need somebody to cook the meat, the meat that you know, the food that you eat. So could that person be an independent contractor? Now we’re like, aha. No they can because do you need them to run the business? So right now you’re listening to business and legal talk with Lira and Claudine and we’re talking about the topics that matter to business owners and you should be paying attention to this because your largest expands as an employer. It’s going to be your payroll, right? And your staffing, your wages and all this stuff that you’re listening to right now affects you. So we’ll be right back. We’re going to continue our conversation on labor regulation
Speaker 4 24:49
Speaker 2 25:01 okay.
Speaker 3 25:10 All right. Welcome back. You are listening to business illegal talk with lyric Claudine here in K FIV um, 1360 iHeartRadio media power talk. Um, we’re having a blast. I mean I had to be reminded twice but our producer that we have to wrap it up in the last segment. So we’re just having so much fun. We are having so much fun and you would think that two people talking about a change in regulation would be so much fun, but I guess we can make a fun. Absolutely. Absolutely. So let’s keep going. All right, so we were, okay. So just to bring you guys back, if you just tune into this show, we’re talking about that the changes that affect you, your biggest expense or investment, whichever way you want to look at it is your staff, right? Right. And we’re talking about the a B C test, right? The new ABC 10 new ABC test that affects you. It’s definitely, if you are here in the central Valley, you are in California and it affects you. Yes. So pay attention
Speaker 2 26:03 and it really is affecting any type of industry. So just to kind of recap, um, virtually anybody who’s using, okay. So absolutely anybody who’s using an independent contractor should stop immediately and reconsider this new ABC test on how we determine whether they are properly classified as an independent contractor or whether they are properly, should be classified as a w two employee. Because this decision right now, you know, it’s, it just created so much havoc. We have a couple of big lawsuits that are going on at the appellate level right now. One, particularly with a trucking company, trucking industries, um, are being hit very, very hard because oftentimes the trucking industry, the dispatcher, you know, hires a truck and the truck’s owned by the, the driver and, and they go on about their business and now they’re saying now, um, there is a lawsuit going on right now that would classify all of those independent contractors that own their own trucks.
Speaker 2 27:06 Uh, as employees, Uber and Lyft, I mean, yes, rocked our world. Yup. Absolutely. The real estate industry, I’ve talked to a few people, um, with the central Valley association of realtors who, um, have had, they had a case a number of years ago that relied on a particular business and professions code that in the business and professions code. And I don’t, I don’t know the citation off off hand, but I’ve read it a couple of times and it, it basically said that in the real estate industry, the brokers can make a decision whether or not, let me, let me state that a little bit different. Realtors could be either independent contractors or employees. And that it w even when I read it, you know, I’m really anxious to see how this is going to come about because because they can be either independent contractor or employee. Doesn’t mean that like anybody could be either like a hairdresser could be an independent contractor or an employee.
Speaker 2 28:11 Exactly. So you could technically be both. You’re not in the same company. That’s right. Or you know, paralegals. They could, they could be independent contractor or um, or a w two employee providing that they fit within the parameters of the Barilla test. And, and I think that we are going to see some real pushback. I mean, the trucking industry right now is, is providing a lot of pushback. Um, but the real estate industry, if, if it comes about that the real estate industry becomes affected by this. I think right now they’re kind of holding tight, um, on some previous decisions that were particular to their industry. Um, but should that get challenged and you know, and what does it take to challenge it? It takes one employee to find an attorney willing to file the suit for. That’s what happened in dynamics. That’s exactly when one person, and that’s, that’s all it takes. And, and these things become challenged and so, well I think a lot of people, um, maybe have a little bit of sense of false security because of their industry has been traditionally looked at as um, as you know, clear independent contractor. Um, I had a client who had a dance studio and had dance teachers that would come in for an hour here or there based on their particular discipline. And they taught, the teachers taught at a whole bunch of different places and they determine their hours and they said, well, I want to teach
Speaker 1 29:42 a clock at a class that, you know, Thursday at five o’clock or you know, whatever it was. And they really did classically fit the definition. They carried their own insurance. They invoiced, they had their own business, they set their own hours, they had their own education. The Danville’s independent contractor, except you want to set the punchline. The punchline is now they are performing a service that falls within the purview of what the company does because the company provides a dance studio. So now it’s, it’s all set on its ear. It’s the well that would be there be. Yeah. Right. That’s it. That’s a killer. The ABC, the ABC B is pretty much the killer and the dividing line and it virtually encompasses every scenario. And so right now the, you know, the good news, the bad news is we have competing legislation right now. Um, one, um, uh, PO proposed legislation is going to what we call codify, um, this Dynamex decision and make it an actual, um, you know, labor code and one is seeking to codify the Barilla test.
Speaker 1 30:53 If you were to look at your crystal ball, what do you like next for the next w it seems like things are very fluid right now in the state. The things are with employment, things are often very fluid. Really. Yeah. Really it really, July, it really changes a lot to me. It was just a couple of years ago. We, um, got hit with the, um, mandatory three days paid sick leave. Right. And you know, July 1st 15, right? Or I think it was 15, 16. Yeah. I w I would remember like forever in my world significantly. I know a month it goes since forever. There’s so much I have to worry about today for our clients, but yet it was, I remember it being very significant because for the first time you have to actually manually track this sick pay. That’s true. That’s right. And a lot, while a lot of the employers are, um, aware, now of course they’re aware that they have to do this and it only took us three years as you know, per usual, but it, you know, and now we’re, we’re accustomed to it and it seems like it’s been there forever.
Speaker 1 31:54 Um, the, the tracking of it, um, is important. People have still come to us with questions on how do they modify their PTO time and what happens there with PTO and how does that, is that affected by, yeah. Right. Because some companies put PTO, they put a sickbay in vacation together and they call it PTO. Well, I had a question about that last week. So what happens when I’m a person say has a week of PTO time and they take their week of PTO time and they go on vacation to Hawaii and they use up their entire bank of PTO time and then they come back and they have and they get sick and they have, so what do we do then? We give them sick time. So it overrules everything, right? I always tell the employer too, if going to air, let’s air on the side of caution, give them the sick time.
Speaker 1 32:43 Don’t ever deny them paid sick time. It’s a regulation you must provide it in. And that’s just the way it is. You provide other things is not relevant to them. Whether or not you provided, you’re saying, let me throw this. Okay, so I’m thinking, so if you have some, so three 24 hours, right? Or 24 hours is the regulation over a year’s time? Correct. So it’s three days, so you can use it two hours, four hours. But what happens? Okay, so if you’re legally mandated and you, somebody uses those 24 hours and you’re tracking it, what happens if they call in sick, uh, beyond 24 hours that you’ve been tracking? So they’re sick for an entire day and that would make 32 hours. Well, excuse me, you’re not in Thai and then required, if I understand the question correctly, you’re not in a required to pay them for that sick time. You’re required to pay for 24 hours, right?
Speaker 1 33:35 Just when you had this thought that anytime we talk about paid sick time or any of that said, it does make me want to cough. So I apologize. I should stop talking about that. It’s a tough thing. Well, the, you know, the other thing that we, I did want to introduce, and I try to talk about this with all of my new clients who are coming in. Um, because I feel like as an, as an attorney that represents business owners, everybody needs to understand that, um, labor codes can often times you can oftentimes receive multiple penalties for violet for one violation or the stacking the second, which is where we were talking about. I need you to hope. Can you write that I need and we need to talk about that. Yes. Okay. Cause we’re coming back. We’re, we’re, we’re getting ready. There’s actually, I want to give you, if you’re listening to this show right now, this is, uh, you know, business and legal talk with Leon, Claudine, and we’re about to go into a break soon.
Speaker 1 34:26 But, um, what about the people to hire op work and use these, uh, websites to hire people that do work for them remotely? Um, you know, you S you could actually have a, a independent contractor in Canada and all that mess. You know, I like to, you know, talk a little bit about, yeah, because I’m sure that I’m not the only one thinking about that. And you know, in an effort to save on payroll. So people are starting to create creative ways, right? So, um, there’s a, there’s a lot there that needs to, needs to be addressed. And I think, um, so we’re going to be talking about that. We’re going to be talking about, um, you know, the, the, the, I don’t know if this is the time, you know, the, I think the whole thing about insuring against that, and I think you should be, you know what, we don’t have the insurance person, but if I had an insurance person right now, there’ll be waving their hands in the air.
Speaker 1 35:18 Like, Oh my gosh, you know, you have to have employment practices type of liability insurance, right? I get it. You get it. But does the average business owner know that there’s insurance that protects you if you’re doing your job? And let me tell you, Murphy’s law, I, and we can talk about this after the break, but I had client who sat down with their insurance broker who said, you really, really need epi insurance. And the broker decided, or the employer decided to bypass it. And, um, two weeks later. Wow. So before, those are the topics, so, so can we wrap this whole thing up? So we have, we, we, we had a couple more minutes but how we put that to rest, the whole ABC test. Do you feel, you know that we’ve talked? Absolutely. I mean, just, just not really. The truth is, is if you use independent contractors in any way right now, please, please stop and look at it.
Speaker 1 36:10 Come talk to us, give us a call. (209) 427-2200, um, you know, hit us up on the website at um, sharon-law.com S H E R R O n-law.com. It is really, really, really the penalties that costs. The Supreme court did say that this, um, can be retroactive. You becoming a professional market that just flew very nicely. Oh my gosh, I’m impressed. What, tell me again what the worst is. sharon-law.com. Just these roles. Well, I think I did pick the domain name. So it kind of was one of those things that I felt good at the time. We evolved over the last six weeks and you know, we, you know, we were never really had a talk show before and now we’re getting somewhere, but we actually having fun. No, but we do talk to clients day in and day out. That’s what I do. So, um, you are listening again to business illegal talk with Lira and Claudine stay tuned. We’ll be right back.
Speaker 4 37:08
Speaker 1 37:37 welcome back. Welcome back. You’re listening to business and legal talk here when the OIN Claudine, he welcome back. Um, John, gosh, where do we leave it? EPL. I insurance, which I find that to be really interesting that you bring up insurance. Why? Because you’re an accountant and a CFO and you’re doing financial things and worry about insurance. Well, yeah, I suppose from an accounting perspective, that’s like the worst case scenario, right? Insurance is there to cover that worst case scenario, but a lot of people don’t and don’t know about Ecolab insurance. So, um, you know, I, people ask me Leo, so what does a CFO do? Right? It, you know, as we’ve talked to them in the earlier shows, um, companies that are North of $10 million and if they actually have capital involved, did they have to have a CFO? If you have zero revenue, he would raise capital for investors. Any self respect that investors are going to want to see, you fall on the, on the company immediately, right? Why? Because CFOs, we worry about two things. Cash and risk. Yeah, right. Risk. I
Speaker 3 38:36 see. And how do you, and and you’re going to hear me talk about this every day, all day tomorrow. Mitigation, risk, mitigation, right? So how do you mitigate risk on the potential or something so profoundly and so expensive that can rock a company. You can actually have a company go out of business not being able to protect themselves against things that they should have known about
Speaker 2 38:57 all the time. All the time. I’ve literally, I’ve literally had a client receive a letter from an attorney come to me and say, what should I do? And I said, you need to tell me what, what is your dollar figure? You know, 10 bucks above bankruptcy and 10 bucks below back bankruptcy and we’re going to hit it right in the middle and we’re going to settle this thing. We’re out of here. Absolutely. And the legal fees were actually very, very low, like less than a thousand dollars by the time we were all done. But he, uh, the employer wrote a check for the settlement. It was just one of those things that it was, there’s no question it could, could have gone like wildfire because you need to have your employee file set up for a certain way. An attorney can’t defend you unless the ammunition’s provided.
Speaker 3 39:41 Correct. So, so, okay, so let’s get a little bit into that. So, employer practices liability insurance. So what it does, it, it acts as like a blanket covering your business. It’s kinda like umbrella specifically for those employment practices. So the way you hire your own boarding, uh, employee handbooks, uh, the way you do progressive discipline, the way you conduct business and you know, the wage and hour, the meal and breaks, all of those things, you know, the business hours and all the protocols that you as a business owner need to be aware of. So you cannot, we, if you have imposed, you’re mandated to obey those, right? Right. Some are state, all, some are federal, but if you’re in a state of California, you are subject to state and, um, so, and you will make mistakes, right? And people make mistakes. And I know I can see you.
Speaker 3 40:25 Okay, hold on. I know you’re already, so employers make mistakes, right? And they do that. And there is this, uh, insurance that I learned about probably 10 years ago and I had, I had a company, had about 50 employees and I run into an insurance broker and he thought of telling me, I’m like you. And he was surprised and I didn’t have it. I’m like, what am I supposed I must supposed to know something? Cause, yeah, like for a small amount of money, that’s, isn’t that what insurance is about? You pay a little bit so you can protect against a whole lot. Right? And so I ever since I learned that I have never not had it. So you do things right and guess what, an employee is going to come after you for whatever reason. But what happens if you did things right? You have insurance defense, you have insurance that is going to protect you because the insurance company’s going to make sure that you have all these things that you say you’re going to have in place, right? So they help you, making sure that you, when you get sued and you will, if you’re in business any length of time so that we have the money to be able to bring somebody competent like you, Claudine. Right? And you have the ammunition,
Speaker 2 41:34 right? Because what are you going to ask for? Do you want to talk about some of the things that you know, like you want, don’t you want to see the employee handbook? Don’t you want to see a progressive discipline? I D uh, well, no. Um, actually there’s a, that’s a whole nother subject, employee handbooks, but we and, and discipline. But w we do, we do want to see that the employee files are in order, that they have certain things in them. Certainly is in 99 is right now. But, um, so we do want to see employers, um, managing their employees, managing them, conscientiously, keeping track of those files, making sure that any, um, any discipline that has taken place has been notated in the file so we have the stuff down. And so we were really worked with employee players a lot to kind of coach them on how, just kind of how to do the employee thing.
Speaker 2 42:28 That’s the ammunition. The other thing is, um, you know, I had a client, speaking of epi insurance, I had a client a couple of years ago who, um, had met with their brokers, I had said, and that broker said, Hey, you know, you’re, you’re kind of getting up there. You have 49, 48 employees. It’s important that you look at epi insurance and you know, they, they decided to pass at that time. And I think, gosh, I want to say it was like a month later, maybe two months later in any event, um, disgruntled employee gets terminated, finds an attorney in LA, decides to come back and Sue determined he is suing for um, some overtime payments that he, he claimed that he was entitled to because of drive time, which if you have people out there with drive time, that’s complicated in and of itself. Um, and so he files a lawsuit but he files a class action lawsuit and then he files what’s called a Pago suit or private attorney general act and we can get into that another time.
Speaker 2 43:20 But that’s essentially it functions like a class action and we managed to argue and dispose of the overtime claims and all of that. And the first thing an attorney does when they are going to Sue you is they send you a letter and they request a copy of the employee file and they want a copy of that employment. And that includes all the employee timecards and a copy of all the wage statements or pay stubs. . The first thing we do is we look at the wage statements and we look to see if there’s any violation on the statement because section two two six of our labor code outlines specific information that must be on, and I’ll tell you what, this client, we, we managed it to skirt all of the overtime and all of the really complicated stuff it came down to was there a pay period starting date and ending date on the paycheck stub.
Speaker 2 44:13 They only had the ending date of the pay period and that particular issue has been litigated by FedEx all the way to the higher courts and the courts have come back and said, you must have your beginning date and ending date. The violation basically amounted to $4,000 per employee. We’re talking about 49 almost $200,000 this my CFO, I mean I’m thinking about money draining out of the bank account and that had nothing to do and that was only one way and we weren’t even stacking. That’s just the one that’s just the one violation and by the way was stacking is is, is something that happens. And so you can be in violation. Let’s say for example, you did not correctly pay your overtime. Um, we see this a lot with people who have employees that are driving. Um, they don’t pay the overtime correctly. And so you get your, you get hit for the, for the overtime, then you get hit for, um, typically, um, labor code five, five, eight, which says if you have not, uh, essentially I’m, and I’m summarizing, if you have not correctly paid on, uh, on a labor code or if your violation of labor code that regulates, um, hours worked, then you get another penalty for $50 for the first pay period and $100 for every pay period thereafter.
Speaker 2 45:40 Um, and so then now you have that penalty and then what happens is you now have a penalty for an inaccurate wage statement because the overtime wasn’t reflected correctly on the wage statement. So now we have another penalty and the wage statement penalty is a $50 for the first pay period, $100 for every pay period thereafter for a cap of 4,000. So the just one thing I didn’t understand the overtime and I was, you know, people were driving, uh, driving and they were, you know, working 10 hours a day and they were getting straight time for the drive time. Um, it, it stacks up and that again, that’s not even going into our pocket claims, which are an addition in addition to everything else. Um, it racks up so quickly that I can’t even imagine. We, we work with clients often to say budget for legal. You know, this should be a line item in your profit and loss and budget for it at the beginning of the year. Think to yourself, okay, we’re going to set aside X amount of dollars for legal. And it’s just there. I cannot tell you how many people come to us who have not budgeted at anything for legal let alone nothing is ever going to happen, let alone disaster. Wow. Let alone disaster. So I’m an EPL, I protects you from all,
Speaker 3 46:55 so back to EPSI. So the way it’s, it’s, it’s okay. So things are going to cost you money. You either gonna pay 100% yourself or you’re going to use another means to pay. Right? So the whole thing of the whole principle about insurance as this is, is, you know, if you have $1 million, I think you can get away with not having car insurance, personal if you, if you put a bond with the state, right? Right, right. So you are legally, um, and what would you in the first place, but you, there’s a legal way out of not paying Geico or whoever else, you know, you have for insurance. But the cost is, the state wants to know that you have the ability to pay if and when something will happen. Right. It’s just a matter of time, right?
Speaker 2 47:42 Yeah. And we really, you know, it’s so important to understand that defending yourself never pays. There’s, there’s no, there’s no, there’s no settlement you’re going to get, there’s no, there’s no, there’s nothing. It’s not like when you’re pursuing a claim, you’re looking for a settlement or you’re looking for, you know, quote unquote windfall of money when you’re the employer and you’re defending yourself. It’s just money going out the door. It’s not coming back again. Even if you went and, and a lot of, you know, less scrupulous attorneys in this industry know that and we call those nuisance claim. They will send you a nasty letter and they’ll say, well look, we’re going to, you know, file this, that, and the other. And um, but if you want to settle for, you know, five to $7,000, we’ll go ahead and take money. Right? Well, and that, it doesn’t take a whole lot of work on a calculator to figure out how quickly does it take to get to five or $7,000 in legal fees.
Speaker 3 48:33 So if you’re listening to this show and we’ve been talking for the last really hour and we’re pretty soon wrapping it up, it’s about how all of this knowledge, the right that as a business owner, how are you going to keep in your head if you’re trying, if you produce, if you have a product you worried about, make sure your product is right and you’re selling it to the market. If you provide a service, you’re perfecting your service and you should be an expert on what you do, right? But everything else, there’s the legal side, there is the accounting side of things. And that’s what we’re trying to help you realize. Just if you listen to this show, if you get one thing today from listening and you put it into action, I would, what would I be plugged in?
Speaker 2 49:13 Well, first of all, if you’re using independent contractors, stop immediately. So that will be the takeaway stop immediately is secondly, um, I, I think just don’t turn your head to, um, the scary monster of employee issues. I think every employer knows that employee issues can create absolute disaster and they can please don’t turn your head to it
Speaker 3 49:39 so well. What a great show in February already be selective. We be proactive and 10 90 nines think about if you have an independent contractor, stop and think if this is really an independent contractor,
Speaker 2 49:50 well it’s probably not now, but definitely sit down with somebody who can help
Speaker 3 49:54 you strategize your part or we go for legal. If they, when I’d reach, uh, get ahold of you right now.
Speaker 2 50:00 Certainly call the office at area code (209) 427-2200 for a website. sharon-law.com and that’s S H E R R O N. that’s
Speaker 3 50:10 right dot com if you want to learn how to grow your business profitably and effective, come all about the profit. Go to Greenland, hq.com G R E N L a N D H q.com or call our office (559) 207-3148 we would love to just hear from you. You don’t have to engage us, but we want to make sure you’re a power. So you have been listening to business and legal talk with Leo and Claudine, and, uh, I hope you have in a fantastic Saturday. We’ll see you next week. See you next week.