Paychex HR and Payroll Services in San Ramon, California

Considerations for California Employers While Preparing to Bring Employees Back to Work

This is not an exhaustive list. It is an addendum to the Paychex Return to Work Checklist. Employers should consult with their HR professionals, legal counsel where appropriate, and California’s Labor and Workforce Development Agency and COVID-19 websites.

☑ Guidance on re-opening businesses

This impacts employers seeking loan forgiveness for their Paycheck Protection Program loan.

☑ What date should employees be recalled or rehired?

This impacts employers seeking loan forgiveness for their Paycheck Protection Program loan.

☑ Know how to address any changes that have been made to federal, state, or local paid leave laws

Familiarize yourself with the Families First Coronavirus Response Act to be prepared if employees are unable to return or need to take time off after returning.

☑ Understand the obligations under a collective bargaining agreement (CBA) if you have unionized employees

Check CBA for rehire/recall language, including agreed upon factors in order to bring employees back. Most changes will need to be negotiated with the union.

☑ If an employee was terminated and signed a separation agreement, check the language to see if the rehire requires an amendment to the separation agreement

☑ Consider providing letter offering return to work or re-hire to employees

☑ Review and adhere to internal policies on rehiring to determine any reinstatement of accrued PTO or vacation time

☑ Provide a new Form W-4 in case the employee wants to make changes upon returning to work

☑ Ensure “new hire” employee documents (i.e. employee handbook, arbitration agreement, etc.) are updated and properly executed

☑ Does the employee need to update an existing Form I-9 or complete a new Form I-9?

Review and compliance requirements for Form I-9.

☑ Did employee elect COBRA, State Continuation, or other health insurance conversion rights?

☑ Determine status of health plans, cafeteria plans, and other fringe benefit plans, such as vision and dental insurance

☑ Determine implications for 401(k), 403(b), and pension plans

Of note, California businesses with more than 100 employees need to implement a retirement plan by Sept. 30, 2020 to be compliant with the state-mandated program, CalSavers.

☑ Evaluate executive compensation and severance arrangements

☑ Consider appropriate actions related to COVID-19 health pandemic

Learn what new supplemental policies on safety are recommended or required to be followed and documented. For example, what measures to promote social distancing in the workplace and safety equipment such as masks and gloves will be provided.

Additional considerations as you prepare to return employees to work include applicable wage and hour laws, especially if employees have different work schedules, pay, and classification under state and federal laws. Check out our Return to Work resource page for FAQs and other helpful information.

Additional state guidance for California businesses can be viewed on our COVID-19 state resources tool.

A bill making its way through the California Senate would require certain types of businesses in the state to provide employees with multi-week work schedules at least seven calendar days in advance of the first shift on that schedule. Supporters of the bill, including several workers' rights groups, say the legislation will help curb abusive scheduling practices by restaurants, retailers, and grocery stores.

SB 878 cleared the Senate Labor and Industrial Relations Committee on April 13 after a 4-1 vote, and is before the Senate Appropriations Committee as of this writing.

The bill as currently written would require restaurants, retailers, and grocery stores to provide a work schedule of at least 21 consecutive calendar days to each of their workers, and to provide the schedules at least 7 calendar days before the first shift on that schedule. In other words, a store clerk, restaurant server, or coffee barista would have knowledge of their scheduled work hours over the next 28 days—a big difference in industries known for calling workers in or sending them home on short notice.

Employers who change the published schedules on short notice would have to pay "modification pay" at the employee’s regular rate of pay.  This would apply if a change is made fewer than seven days but more than 24 hours before the scheduled shift.  The modification pay would increase to an amount equal to or greater than half of the employee’s scheduled hours for the modified shift, where the change is made less than 24 hours before the start of the shift.

If a worker is on-call but not called in, employers must also pay modification pay equal to or greater than half of the employee’s scheduled hours for the on-call shift, at the employee’s regular rate of pay.

However, modification pay is not required where the change is made due to special circumstances  , including power or water issues, natural disasters, or even another employee calling in sick on short notice.

Employers are also required to display a poster that will be developed by the labor commissioner or face a $100 fine for every willful violation of this notice requirement.

The California Senate is considering this proposal about a year and a half after the San Francisco Board of Supervisors passed a "Retail Workers 'Bill of Rights." The rules, which went into effect in October 2015, generally require two weeks’ notice of work schedules and also modification pay for changes made within seven days of the scheduled shift or on-call shifts in which there was no work available.

Scheduling legislation has also been proposed in nearly a dozen other states in recent years, according to the National Women's Law Center. And Democrats in Congress have been pushing for a Schedules that Work Act; a proposal that could get some traction if Democrats take back control of the Senate, or perhaps even the House after the 2016 election.

Workers’ rights advocates have been increasingly complaining about unpredictable scheduling.

About 17 percent of the U.S. workforce experiences unstable work shift schedule, according to the Economic Policy Institute. Low income workers are more likely to face such unpredictability, which raises the chances of work/family conflict.

In April, New York State Attorney General Eric T. Schneiderman joined attorney general offices from seven other states and the District of Columbia to complain to major retailers about their use of on-call shifts. Said their letter: "Unpredictable work schedules take a toll on employees. Without the security of a definite work schedule, workers who must be 'on call' have difficulty making reliable childcare and elder-care arrangements, encounter obstacles in pursuing an education, and in general experience higher incidences of adverse health effects, overall stress, and strain on family life than workers who enjoy the stability of knowing their schedules reasonably in advance."

Visit Paychex WORX for updates on California SB 878 and other legislation that could potentially affect your business.

The building you rent or own as well as the equipment you use to operate your business are integral to keeping your doors open. But when a disaster impacts these assets, it could be difficult for a business to recover. Hazard insurance for small business can help cover the costs of repairing or replacing the physical structures and equipment that your business relies upon. Another name for this coverage is commercial property insurance.

What Does Business Hazard Insurance Cover?

Business hazard insurance, also known as commercial property insurance coverage, helps protect the building your business owns or rents, as well as the equipment you use. Depending on your policy coverage, this type of insurance covers the cost to repair or replace:

• Personal property
• Tools and equipment
• Inventory
• Furniture
• Computers
• Accounts receivable
• Documents
• Outdoor landscaping

A hazard insurance policy generally covers losses due to unexpected events such as:

• Fire and smoke damage
• Theft and vandalism
• Some weather-related events such as hail, lightning, snow, sleet, or ice
• Explosions
• Damage caused by aircraft or vehicles
• Sprinkler leakage
• Building collapse
• Certain types of water damage
• Civil unrest or rioting

Items typically excluded from a hazard insurance policy are damages due to flooding, earthquakes, acts of terror, nuclear attacks, or damage from war. Protection from these events would require a separate insurance policy.

Why Do I Need Hazard Insurance for a Small Business?

While many states do not require business owners to carry hazard insurance, it's a good idea to have to help cover the costs of damages you would otherwise have to pay out-of-pocket for. You may also need a specific hazard insurance policy if you're planning to secure business funding from a lender. Loans from the U.S. Small Business Administration (SBA), for example, may require proof of business hazard coverage (see below for more details).

Hazard Insurance for Home-Based Small Businesses

If you're looking to protect a business you operate out of your house, your homeowner's insurance policy might not provide adequate coverage for business property stored in your home. Hazard insurance may offer added coverage for your home-based business property that would otherwise not be covered by a homeowner’s policy or be covered at lower limits under a homeowner’s policy.

How Much Does Business Hazard Insurance Cost?

The cost of a hazard insurance policy will differ for every business. Primary factors that can influence the cost of hazard insurance include:

• Property age and value: The more property you have, the more that coverage will cost.
• Replacement value vs. cash value coverage: Replacement value is the cost to purchase a new version of the damaged property, while actual cash value is based on how much the covered item cost before it was damaged. Given depreciation, cash value coverage is usually less expensive than replacement value coverage.
• Coverage limits: As with most insurance policies, your premiums will increase for more coverage.
• Lender requirements: Before granting a loan, a lender may stipulate that you have a specific amount of property coverage.

Hazard Insurance for an SBA Loan

As part of granting a loan, the SBA outlines that proceeds from insurance coverage, which may include hazard insurance, can be deducted from the eligible loan amount. Additional location-related coverage (such as policies that protect against floods or earthquakes) may also be required. This includes economic injury disaster loans the SBA granted to businesses that were negatively impacted due to COVID-19.

What Type of Hazard Insurance Does the SBA Require?

The SBA will require a business to obtain adequate insurance coverage to qualify for a loan. This may mean general liability coverage and/or commercial property insurance that includes hazard coverage. Keep in mind that the SBA may require other insurance coverage (e.g., workers' compensation), depending on the type of loan you're looking to secure.

Specifically, the SBA will be looking for hazard insurance that meets the following criteria:

• The amount of coverage must equal at least 80% of your loan amount.
• The insurance must be listed under the name of the business.
• If you operate under a doing business as (DBA), it must be listed on the policy.
• If the business doesn't currently have the necessary insurance, it must provide proof of coverage within 12 months of receiving a loan.

Is Hazard Insurance Tax-Deductible?

When it comes to business insurance in general, the IRS stipulates that it's a part of the cost of doing business and therefore tax-deductible. In the case of whether hazard insurance is tax-deductible, there are some additional points to consider.

The IRS allows you to deduct home office expenses if you run a home-based business. While this includes items such as utility expenses and home office equipment, it can also include your insurance premiums. For instance, if 50% of your home is used solely for the purpose of operating your business, you can deduct 50% of your yearly hazard insurance premiums.

You may also be able to claim deductions in the event that your business experiences losses in federally declared disaster areas. For example, if you file a claim on your hazard insurance and your insurance company only pays a portion of the amount, you can deduct the remaining amount minus $500 per incident.

If you're unsure whether hazard insurance for small business is tax-deductible, it's a good idea to work with a professional who can help ensure that you're taking advantage of all the tax deductions your business is eligible to claim.

Protect Your Business With Ample Insurance Coverage

Adequately protecting your business is a crucial part of success. That means securing a business insurance policy that protects the business, its assets, your employees, and other important aspects that keep operations up and running. Get the ultimate peace of mind with complete business coverage for your organization, or get in touch for help with policies that match your needs.