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.

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.

Cost of living adjustments may help employees manage rising prices for basic staples such as housing, energy, and food. A cost of living raise for employees is not based on job performance or a promotion. Rather, the pay increases are given to counteract inflation and help employees maintain their earning power. With inflation continuing to have an impact in 2023, businesses have seen an increased need to implement cost of living raises.

What Is a Cost of Living Adjustment?

COLAs are increases in salaries or hourly rates to help employees maintain the value of their compensation against inflation. These increases are not viewed as merit increases resulting from good job performance. Cost of living raises can be a way to maintain the employee's earning power. Generally, employers calculate the amount of a cost of living pay increase by using a price index, such as the Bureau of Labor Statistics' Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). This index measures the rise in consumer prices for households where at least half of the income is from clerical or urban wage occupations, and at least one of the household's earners has been employed for at least 37 weeks over the past twelve months. This represents about 29% of the U.S. population.

What Is Social Security Administration’s COLA Increase for 2023?

Each year, the Social Security Administration applies a COLA to payments made to those receiving Social Security and Supplemental Security income (SSI). For 2023, the COLA increase is 8.7%, which is significantly larger than the COLAs in recent years.

How Does a Cost of Living Adjustment Work?

A COLA is a standard, across-the-board increase for a group of individuals. Employers might give out a cost of living raise where each employee receives the same percentage increase.

Typically, the cost of living in large cities such as New York or Los Angeles is higher than smaller, rural communities. Employers with employees in a number of different cities or states may choose to adjust their cost of living raises based on location. This may help to meet more expensive housing, gas, or food costs affecting workers in certain areas.

In some cases, cost of living pay increases may be a requirement. Minimum wage laws, union agreements, executive contracts, and even retiree benefits such as employee pensions may contain provisions for annual COLAs. Some of these automatic adjustments may be able to be programmed into a compensation system to guarantee that they take effect as stipulated while others may require additional oversight.

What Is Included in the Cost of Living Adjustment?

A COLA is often calculated based on an underlying metric, such as the Consumer Price Index (CPI) or the CPI-W. The indexes calculate price increases in living staples such as housing, food, and energy costs. State law or a union agreement may specify which index should be used to calculate an annual cost of living increase. Employment agreements may also state the specific index that must be used to measure any cost of living raises.

Do Employers Have To Give Cost of Living Adjustments?

A cost of living increase is not mandated unless required by law or agreement, such as annual minimum wage increases, or stated in a union agreement, benefit plan document, or employment contract. When cost of living raises are offered to employees, they may not be needed every year. In some years, inflation remains flat and the cost of living doesn't change, which means that employees' pay value is not diminished.

Why would an employer give a COLA? There are several common reasons, including:

• Concern over employee retention when competing firms begin to offer higher pay rates.
• The need to persuade employees to relocate to a city or state with a higher cost of living.
• To alleviate financial stress placed on employees during periods of inflation.
• Doing so is required by law or under the terms of an agreement.

How To Calculate a Cost of Living Adjustment Payment for Employees

A COLA typically can be calculated as part of an annual compensation plan review. An employer should determine which price index best aligns with their employees' cost of living. If the chosen index rose 6% in the past year, employee salaries or hourly rates would be adjusted by a similar amount.

For example, an employee with a $100,000 base salary might receive a six percent raise, or $6,000 for their COLA, prior to any performance-based increases. Likewise, an employee making $20 per hour might receive another $1.20 per hour, raising their pay rate to $21.20.

How Much Is a Typical Cost of Living Raise?

Over the years, COLAs have varied. In some years, prices are stagnant, and no adjustment is needed. Since 1975, the Social Security Administration has calculated COLAs using the CPI-W. The average annual COLA since that time has been 3.7%, which makes the most recent adjustment of 8.7% greater than a typical year.

Historically, adjustments to the minimum wage were enacted to assist lower-paid workers when the cost of living increases. Many states and localities have a higher minimum wage than the federal amount. And several have implemented annual increases based on increases in the cost of living.

Understand How Cost of Living Impacts Your Business

Competitive wages help to attract and retain employees. When employers fall behind and fail to pay enough to help employees make ends meet, they risk a loss of human capital. To hire the best people in each geographic job market, it's important to understand how cost of living can shift between different locations. If you plan to offer a cost of living raise in the upcoming year, you can do so most efficiently by working with your payroll provider to implement the increase across the board.