Flexible Work Schedules: The 4-Day Workweek

In a survey by Harvard Business School and Boston Consulting Group of 11,000 workers and 6,500 business leaders, the vast majority said that among the new developments most urgently affecting their businesses were employees’ expectations for flexible, autonomous work, better work-life balance, and the ability to work remotely. (Just 30%, though, said their businesses were prepared to implement these changes.)    Technology has made it easier for employees to seek non-conventional employment, changing not just what they do while they are at work, but how they work.

As a Professional Employer Organization (“PEO”), our clients routinely call for HR advice on a wide variety of topics, including alternative work arrangements.  Many such questions come from our federal government contracting PEO clients, who are often called upon to staff contracts quickly and at locations that are outside of their corporate office and even in different states.  One type of flexible schedule that is gaining popularity among PEO clients and others is the four (4) day workweek.

A.  Workplace Demographics Causing the Shift

For many Americans, work has historically been more an obsession than a vocation. It has caused burnout and unhappiness as people struggle to find time for children, hobbies, vacations, or any sort of personal life outside of what they do for a paycheck.  Younger workers expect and are starting to demand increased schedule flexibility, like the ability to work remotely, come in late, or leave early.  Older generations are now beginning to follow the younger generations’ lead, and they too are asking to shape their jobs in ways that better fit with their daily lives and responsibilities outside of work.

Consider these statistics:

  • By 2025, Millennials Will Comprise Three-Quarters of the Global Workforce.
  • By the end of 2020, 41.0% of the global population will be twenty-four (24) years old or younger.
  • By 2030, one in five U.S. residents will be retirement age

In 2016, Millennials (born between 1981-1996) surpassed Generation X (born between 1965–1980) as the largest generation in the American workforce. Millennials embrace workplace change – from the birth of the #MeToo movement to the expansion of technology, to the ongoing push for paid sick and family leave.  There is also now growing momentum among this generation of workers for another significant change: the implementation of a four (4) day workweek.

B.  Some Potential Benefits

 The four (4) day workweek typically consists of either the “4-10” workweek, which condenses the 40-hour workweek into four, ten hour days, or the “4-8” workweek, which simply cuts a day from the traditional forty (40) hour workweek, and makes the workweek thirty-two (32) hours.  Actual cost savings and benefits will vary, but in general, organizations that have implemented this program cite:

  •  Climate conservation – employees that do not have to commute that extra 5th day save on gas, which reduces carbon emissions;
  • Better Work life balance – today’s workforce, especially young people, are asking for more flexibility because they’re marrying and having children later and many are caring for aging parents;
  • Overhead cost reduction – one less day of work is one less day with the lights and air conditioning on in the building; and
  • Greater Satisfaction and Productivity – Some employers report that their employees are happier and more productive under a four (4) day workweek, particularly if they are able to change their “off day” to fit various outside responsibilities like doctor’s appointments, school events, child-care issues, etc.

C.   A Recent “Real World” Example

The most recent organization to trumpet the truncated workweek is Microsoft Japan, which boasted about its “four-days-a-week” trial last summer. The company gave more than 2,200 workers off every Friday, but paid them the same. The results, according to Microsoft’s own report, were generally good; the company saved on energy costs and employee productivity increased.  However few organizations have initiated such large-scale trials.

D.  Challenges to a Four (4) Day Workweek

Not everyone is sold on the four (4) day workweek.  Since the practice is so new and has not been tested on a large scale among both small and large employers, several questions remain about its efficacy.

  • Productivity – a longer work-day may not immediately translate to greater employee productivity toward the end of the day, especially for physically demanding jobs;
  • Conflicts with vendor/customer schedules – your vendors and customers may still need services on the days the office is closed or that a key employee is off;
  • Wage & Hour law – non-exempt employees may need to be compensated for overtime for daily shifts lasting more than eight (8) hours (e.g., in California);
  • Employee relations — sometimes tensions flare between young people who demand a life outside work and deskbound older workers. Plus, not all positions in the company may be suited to a four (4) day workweek.  Thus, employers may have to be extra careful in explaining to those workers why they are not allowed to work a four (4) day workweek; and
  • Aligning PTO accrual – If a business has some workers using a four (4) day workweek, and others using a traditional five (5) day workweek, your PTO/vacation policy should be changed to refer to the accrual based on hours not weeks.

E.  Conclusion

The “jury is still out” on the four (4) day workweek. While younger generations continue to push for it, employers thus far have shown limited enthusiasm. Although employers utilizing the four-day workweek will almost certainly attract job-hopping Millennials, there is no guarantee that it will increase productivity or reduce operational costs.  Employers run the risk of spending time and money on a new work model that ultimately delivers underwhelming results. And, in the wrong state, incorrect implementation of the “4-10” workweek could expose you to significant wage and hour violations among non-exempt, hourly paid employees, unless you plan accordingly for the inherent overtime.

All that said, there appear to be tangible benefits to a four (4) day workweek.  The key for employers is to first evaluate whether and to what extent such a model would impact their core business operations and second, to determine what percentage of their workforce could reasonably utilize such a work model.  Even if an employer determines that it might want to implement a four (4) day workweek, be prudent; try a thirty (30) day “trial” with a few departments to see how the new schedule works out before rolling it out across the whole company.


C2 is a Professional Employer Organization (“PEO”) that provides outsourced HR services to businesses across a variety of service industries, including federal government contractors.  Utilizing our PEO model allows clients, to transfer to the PEO HR responsibilities such as payroll, benefits administration, employee onboarding, and employee relations issues.  A PEO like C2’s also helps shield employers from liability for HR related matters, because the PEO takes on some of the responsibility and liability for ensuring that the HR functionality operates in a compliant fashion.  C2’s PEO model provides a robust, full-service HR team tailored to meet our clients’ specific HR needs.  C2’s PEO does not manage your workforce; rather, its PEO model is designed to become your HR partner to allow you more time to focus on your company’s core business operations. More information about C2’s PEO and other related HR services is available on its website at www.c2essentials.com.

 As a PEO, C2 believes in providing educational material to both its existing and potential clients.  Therefore, C2 blog posts are intended for educational and information purposes only.



Salary History Bans Gain in Popularity

Staying abreast of all the HR changes taking place in different jurisdictions around the country can be daunting – particularly for companies with offices in multiple jurisdictions.  Every new state law, it seems, is in response to a social or political movement that takes on a life of its own, and often a name of its own.  Changing employment laws have been part and parcel of such recent movements as #metoo, ban-the-box, pay equity, and salary history bans.  It can all be a little confusing.  No wonder one of C2’s clients phoned recently to ask for clarification about salary history bans and how to determine whether and to what extent it needed to adjust its HR practices.

A.  The Evolution of Salary History Bans

Ever since the enactment of the Lily Ledbetter Fair Pay Act in 2009 (“Lily Ledbetter”), the drive to equalize pay among men and women performing the same job has been at the forefront of our collective HR consciousness.  The push for equal pay has spawned a “sub-movement” known as salary history bans, which focuses on eliminating salary history questions from employment applications or the interview process.  The rationale for eliminating these questions is that they allow employers to base their employment decisions, at least in part, on how much candidates earned at previous jobs, which perpetuates pay inequality because women have historically been paid less than their male counterparts for the same work.  In keeping with the spirit of Lily Ledbetter, and other federal predecessors such as the Equal Pay Act (“EPA”) of 1963 and the Fair Labor Standards Act (“FLSA”), many states are now enacting laws that limit or completely restrict employers’ ability to collect candidate salary history, making it illegal for employers to ask candidates to list their current and previous salaries.  As a result, hiring managers and recruiters have to reexamine how to carry out those wage conversations and whether information concerning a candidate’s compensation history can be obtained and, if so, at what stage of the hiring process.

B.  Slow Progress Continues

While the EPA certainly drew a line in the sand regarding pay discrimination based on sex, some would argue its protections failed to alter the pay disparity landscape in the decades since by poor enforcement, a lack of recoverable damages, and other economic factors.  At the time the EPA was signed into law by President Kennedy in 1963, women for example were making roughly 60 cents on the dollar as compared to men.  Fast forward to today, a recent report from the Department of Labor Statistics indicates women earn close to 90 cents on the dollar, as compared to men.  Gender pay disparity has historically risen as compensation increases.  Women are understandably frustrated with being unable to completely close that pay disparity, which has driven various states to enact their own laws – one popular one being bans on inquiring about candidates’ salary history, so that historical pay discrimination is not perpetuated to younger generations.

C.  Coming to a State Near You

Recently, Virginia, Governor Ralph Northam removed salary history questions from state government employment applications.  Perhaps this is an indicator Virginia is gearing up to require private sector employers from collecting salary history as well.  As more states and cities continue to ban salary history, employers should pay particularly close attention to the states in which they have employees in order to ensure their own application and hiring processes are compliant.

As it stands currently, the following jurisdictions have instituted in part or altogether a ban on questions regarding candidates’ compensation history:


Salary History Bans


D.  A One Application Solution?

Jurisdictions that have adopted salary history bans have done so to varying degrees.  Some just require removing the salary history question from pre-screening questionnaires or the employment application.  Some allow employers to inquire into salary history only after a conditional offer of employment has been made; and some completely prohibit the question during the hiring process.

To help ensure compliance across differing state laws, savvy employers have established their own internal processes and forms that are suitable for use in all jurisdictions. Federal contractors for example tend to be in a unique situation in that they’ve already negotiated labor rates with the government prior to staffing the contract with employees.  As a result, some hiring managers connected with those programs lead with a “take it or leave it” approach when discussing salary with candidates: “this position pays X and is non-negotiable, does this work for you?”  Other corporations have instituted pay banding, which creates specific ranges for each job based on skills, experience, education/certifications, which helps eliminate the need to know a candidate’s salary history. Pay banding also provides a benchmark at the point of entry for the employee and maps out their career path, at least from a salary perspective.  Still other companies have re-framed the salary history question to instead ask the candidate to provide their “salary expectations” for the job to which they are applying.

Regardless of the specific law, the common theme among salary history bans appears to be that salary history questions are not allowed on an initial questionnaire or application.  At a minimum then, employers would be smart to go ahead and revise their initial job application or questionnaire to remove questions regarding salary history.  While they will still need to be aware of the nuances of a state’s salary ban law, at least removing those questions from the initial forms helps start off the hiring process in a compliant fashion.

E.  Employer Takeaway

As state legislatures continue to build upon the patchwork of salary history bans, employers will have to think creatively and revamp their own internal processes to stay compliant.  Whether it involves changing forms, policies, or practices (or some combination thereof), employers must be prepared to adjust on the fly to meet the changing laws in this area.


C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.

Paid Family Leave Continues to Gain Traction

As a Professional Employer Organization (“PEO”), part of C2’s responsibility is to assist our clients with securing and administering benefits for their employees.  C2 assists with everything from shopping health insurance options to helping manage employee leaves of absence.  That’s why one of our government contracting clients recently asked for guidance on how to handle an employee who had just informed them that she was pregnant, would need to take some time off work, and wondered whether any of that time off would be paid. As we explained to our client, the answer is “complicated” and depends almost entirely on the state law where the employee works.

A.  The Current State of Affairs

Globally, forty-one (41) countries provide varying degrees of paid family leave to their citizens. The United States does not have a federal law requiring employers to provide paid family leave. The sole federal leave law is the Family and Medical Leave Act (“FMLA”), which only provides for unpaid leave in certain circumstances related to an employee’s (or family member’s) serious health condition, surrounding the birth or adoption of a child, or to care for an injured servicemember.

However, the District of Columbia and eight (8) other states (California, New Jersey, Rhode Island, New York, Washington, Massachusetts, Connecticut and Oregon) have enacted their own laws that mandate paid family leave. Although, the laws in Washington, D.C., Connecticut, Oregon and Washington state haven’t gone into full effect yet. The paid family leave is provided to the employee by the state and the source of the funding varies from state-to-state, but generally involves an additional payroll tax. In some states both employer and employees pay into the fund. Whereas, some states are funded solely by an employer tax or an employee tax.

B.  Some Employers Are Choosing to Look Ahead

Many employers are staying ahead of the curve and implementing a paid family leave benefit prior to their state requiring it. Not only does this allow them to, potentially, already be in compliance with a new law, if passed; but providing paid family leave is becoming a popular benefit that companies are using to attract talented employees. An attractive benefits package can be a determining factor in recruiting and retaining high quality employees.

C.  Practical Considerations Before Implementing

Before an employer implements its own paid family leave policy, there are several factors to consider. The following are a few to take into consideration as your company attempts to craft its own program.

  • Length of Service and Employment Type: Are you going to attach a length of service to be eligible for the benefit? Most state and federal laws have a one-year, full-time service requirement to be eligible. Remember, once you attach a length of service requirement, it must be consistently applied. Additionally, your company should decide what classes of employees will be eligible for this benefit (i.e., all employees vs. just full-time employees).
  • Total Time Off: How much leave time will your policy provide? It’s important to keep in mind that this benefit would not just be for new mothers who delivered a child; but should also apply to fathers and adoptions or foster care placement in order to comport with most state and federal sex discrimination laws. Will unused leave time expire at the end of the year, or will you allow some rollover to the next year?
  • Family Medical Leave Act (FMLA): If your company is required to provide FMLA leave, would the paid family leave and FMLA run concurrently? The best answer is yes, they should. The paid family leave benefit provides a monetary benefit, whereas the FMLA leave provides unpaid leave with job protection. Running the two leave benefits concurrently will prevent an employee from utilizing the paid leave and then having all twelve (12) weeks of FMLA leave remaining to also utilize.
  • Scope of the Leave Benefit: What circumstances will trigger a family leave entitlement?  Does your company intend the leave to be used only for the birth or adoption of a child (i.e., parental leave) or do you want the leave to be broader and encompass sickness or illnesses that might affect immediate family members?  There is no right or wrong answer, but defining the scope of the leave benefit is critical.
  • Other Paid Benefits: Do you have a short-term disability benefit? If so, mothers who deliver their child should be eligible for these benefits. However, most short-term disability benefit plans have a waiting period for benefits and will only provide up to a certain dollar amount for time missed. In addition, these benefits typically end around week six after delivery. An employer’s family leave policy could provide compensation for the elimination period of the short-term disability benefit and then provide the difference in pay between regular wages and the short-term disability benefit.
  • Timing: How long will employees have to use the paid family leave? Will the benefit only be available immediately after the initial birth or adoption; or will you allow employees to utilize family leave within a certain time frame thereafter? For example, your employee recently became a new father. His wife, who delivered the child, has FMLA and paid parental leave with her employer. Your employee wants to take his paid family leave after his spouse has exhausted her leave benefits so that one parent can stay home with the newborn. Will you allow this? Many employers do, but a reasonable time frame to utilize the leave after the child’s birth is appropriate – say six (6) months, for example.
  • Proper Documentation: Regardless of whether your employee is giving birth to the child, is adopting, or is the father, you want to be sure you are consistent in your application of the policy and any documentation required (e.g., leave request form). Proper documentation will help eliminate confusion on both ends.

D.  Employer Takeaway

A federal paid family leave law, while often discussed, is unlikely to pass Congress in the immediate future.  That’s one reason that state paid family leave laws have started to proliferate.  But even if the state where your company is located does not require some type of paid family leave, chances are reasonably good it may in the not-too-distant future.  At a minimum, companies should begin doing preliminary planning and cost analysis so that they are prepared should their state adopt a paid family leave law.  That way also, should your company decide it wants to join many other employers and enact a paid family leave program on its own to stay competitive in the market, the preliminary groundwork is already done.

C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.

Overcoming New-Hire Boredom at Work

Newly hired employees can become bored, disengaged and less productive if you do not take proactive steps to challenge them from the start. The first several weeks in a new job can often be spent completing forms, learning company practices, software systems, and co-worker names – all while getting introduced (slowly) to the duties of your role. Some employees get through this process just fine, while others get bored and sometimes frustrated that they are not immediately bestowed with all of the responsibilities for which they were hired.

One of C2’s professional employer organization (“PEO”) clients recently called to ask for suggestions on how to handle five new hires who seemed to be growing restless that their introduction to the company and accompanying training was taking so long. There are no easy answers here, since most companies today have varying degrees of “onboarding” and training that must take place before an employee can start spending most of his or her day on substantive projects. However, being proactive about integrating new hires into your company culture while maintaining an emphasis on the job duties for which they were hired can help bridge that initial gap of monotony until the company is ready for them to put their skills to substantive good use on a daily basis.
For all the resources spent trying to recruit the best candidates, here are a few ways to increase productivity and keep new hires engaged during that introductory period.


A. New Equipment

New hires are looking forward to their first day on the job. Just like a kid on the first day of school, they too wonder where will they sit, what their new office/desk will look like, will they like their co-workers, and what kind of computers, phone, or other equipment will they have? Being ready on day one to provide your new hire with all the proper equipment can go a long way toward making the new hire feel welcome and interested in their new role. By contrast, if your new hire spends the first couple of days waiting around for IT to find them a laptop or set up new software on their computer, that can send a message to your new hire that you did not plan for their arrival and are not all that excited about them joining your team. This simple yet crucial step can help get your relationship with your new hire off to a productive start.


B. Early Manager Involvement

New hires need to have proper training either by their manager or a peer. In that regard, a defined training plan can be a valuable tool – not only to make sure the new hire gets trained properly, but also to ensure engagement with the new hire on a regular basis. Managers often get busy with meetings and putting out fires both internally and externally, which can lead to the new hires sitting in their office with little to do. Managers should have their training plan ready on the new hire’s first day, and schedule training sessions for their new hire to help ensure a smooth transition and early engagement. Keeping your new hire engaged provides them with a feeling of accomplishment, increases their confidence, and generates excitement about their new role with your company.


C. Communicate Effectively

As workplaces have become more diverse, the need to communicate effectively and clearly has become paramount. Communication across departments and between employees, managers and their staffs are all essential to successfully operating a business on a day-to-day basis. However, companies sometimes struggle to consistently provide effective communication in their workplaces. Setting open, productive communication habits with your new hire from the start can lay the groundwork for effective communication practices and will help prevent the new hire from feeling isolated or, worse, feeling unwanted.


D. Foster Inclusion Among Co-workers

Generally speaking, happy employees are more engaged, more productive, harder working, and more loyal. Find ways to break-up the workday, encourage people to build relationships, reward productivity and above all else, have some fun! It is always a good idea to plan fun events for your staff (even if it is just ordering in lunch one day for everybody), but making sure to include your new hires can help make them feel welcome and stave off feelings or boredom and isolation at the start of their employment as they get up to speed on all aspects of their new job.


E. Change-Up the Routine

An easy way to keep your new hires engaged is to provide more variety in their work day. Perhaps they could spend the morning on one project and an afternoon on another. Intersperse the mandatory “onboarding” and basic employee training with more substantive tasks directly related to their job. Remember, at the outset of their employment, the goal is to prevent new hires from getting bored, so changing up their routine and allowing them to frequently start new tasks or jump back and forth between them is an easy way to keep them engaged. Breaking up the routine, even a little bit, will help your new hires remain fresh and excited about their new role.


F. Challenge New Hires Early

Giving new hires at least a “taste” from the start of the challenging work and responsibility for which they were hired can stave off boredom and help stoke excitement about what they will be doing on a regular basis once the introductory paperwork and training period is over. Managers should obviously walk the line between not overloading their new hires and not giving them enough substantive work early on. However, employees most often report that were not given enough substantive work to do as a new hire. So managers should provide their new hires with some real substantive work, but also keeping an open line of communication with them to monitor their progress.


G. Summary

Obviously, there are tedious parts to every job. No employee is going to love every task they undertake, but that is just part and parcel of having a job. To a degree, employers should legitimately expect their employees to be self-motivated, and to perform their job duties at a high level without significant “hand holding.” On the other hand, employers must recognize that they play a big role in the quality of their employees’ work environment – particularly with respect to new employees. Making a concerted effort to engage and challenge new hires from the start can stave off feelings of boredom and foster excitement in the company’s mission. Employers invest a lot of resources (in both time and money) in bringing on new employees. Nurturing that investment from day one can help ensure your new hire is happy and lay the groundwork for the employee’s long-term productivity.


C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.

New California HR Developments for 2020

If you are an employee, California can be a great state in which to work.  The wages are higher than most states and California has some of the most employee-friendly HR laws and regulations.  Employer’s though often have a different opinion.  California’s myriad employment-related requirements can be complex and burdensome for employers to implement.  That’s why when one of C2’s government contracting clients recently won a contract in California, they called us wanting to discuss recent HR changes there.  Never one to disappoint, California rang in the New Year with changes that bring further complexity to the state’s HR landscape.  Let’s check out the most notable changes for 2020.

A.  Restrictions on Arbitration Agreements

New California Labor Code § 432.6 prohibits employers from requiring an applicant or employee to sign an arbitration agreement as a condition of employment.  The new law also prohibits retaliation against applicants or employees who refuse to sign arbitration agreements.  Business groups have challenged the new law in court on the grounds that it is preempted by the Federal Arbitration Act.  And recently, a federal judge enjoined the law from taking effect until the litigation is resolved.  So, for now, California employers can continue to use arbitration agreements, but they need to continue to monitor this case closely.

B.  Longer Statute of Limitations for Discrimination Claims

Employees will now have three years, as opposed to one year, to file claims for discrimination, harassment or retaliation with the Department of Fair Employment and Housing.

The one-year statute of limitations for filing a civil action after the employee files a Fair Employment and Housing Act (“FEHA”) complaint remains the same.  This law only applies to California state discrimination claims; the statute of limitations and filing deadlines under federal anti-discrimination laws (e.g., Title VII of the Civil Rights Act) remain unchanged.

 C.  Prohibition on “No Rehire” Clauses

California has long opposed agreements and contracts that restrict employees’ ability to work or change employers.  Now, settlement agreements between an employee and employer that resolve employment-based claims may no longer include a “No Rehire” provision, unless the employer has determined in good faith that the employee engaged in sexual harassment or assault.  As a practical matter, this means that an employer could settle a claim with a former employee, but could not prevent the employee from later applying or even being rehired by the company, unless sexual harassment or assault was part of the basis for the employment separation.

 D.  The “ABC” Independent Contractor Test Gets Codified

On September 11, 2019, the California legislature approved a new law (Labor Code § 2750.3) adopting the “ABC” test set forth in the California Superior Court’s 2018 decision in Dynamex v. Superior Court for determining whether a worker is an “employee” or “independent contractor” under California state law. 

Under the “ABC” test, any person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the company hiring the worker demonstrates all of the following:

(A) the person is free from the control and direction of the company in connection with the performance of the work, both under the contract for the performance of work and in fact;

(B) the person performs work that is outside the usual course of the company’s business; and

(C) the person is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work that is to be performed.

Notably, the Dynamex court’s original decision was limited to IWC Wage Order violations.  However, the new codified version expands the reach of the “ABC” test to violations of the Labor Code generally, and also for purposes of unemployment insurance and workers’ compensation.

One positive for employers, there are several categories of workers who are exempt from the new law.  Those categories include, in part: (1) certain professionals (e.g., doctors, lawyers, accountants, HR managers, etc.), (2) “arts” industry workers such as writers, actors, directors, graphic designers, and photographers, (3) real estate industry professionals, (4) some construction industry workers, and (5) business-to-business contracting relationships.  This new law is expected to be challenged by business groups, since hundreds of thousands of workers across the state may have to be reclassified as employees and not independent contractors.  But until a court weighs in on the new law, some businesses will need to radically restructure their operations or transform these workers into employees in order to comply with the new law. 

E.  More Lactation Accommodation Requirements

Since 2002, California law has required employers to provide reasonable break times and locations, other than a bathroom, for employees to express breast milk in private. New for 2020, California has expanded that law to impose additional lactation accommodation requirements. This new law requires the lactation “room” to have certain mandatory features, requires employers to have a lactation accommodation policy, changes the ability to claim an exemption, and expands the available penalties for non-compliance with the law.  Notably now, lactation rooms must not be a bathroom and must have electricity, a sink with running water, a refrigerator, a place to sit, be in close proximity to the employee’s normal work station, and contain a surface for a breast pump and other personal items.

F.  Hairstyle Discrimination Prohibited

On July 3, 2019, Governor Newsome signed into law Senate Bill No. 188, the Create a Respectful and Open Workplace for Natural Hair Act (“CROWN” Act).  The law became effective January 1, 2020, and amended provisions of the FEHA and the California Education Code that prohibits discrimination based on race.  The new law expands the definition of “race or ethnicity” to include hair texture and protected hairstyles, including “braid, locks and twists.”  The legislature explained that the new law was needed because “workplace dress code and grooming policies that prohibit natural hair, including afros, braids, twists, and locks, have a disparate impact on black individuals as these policies are more likely to deter black applicants and burden or punish black employees than any other group.”  (Incidentally, the state of New York now also has a similar law that bans employment discrimination based on hair type or style.)

G.  Minimum Wage Increase

Effective January 1, 2020, the California state minimum wage increased to $13.00/hour for employers with twenty-six (26) or more employees and $12.00/hour for employers with fewer than twenty (20) employees.

Note that certain California cities have higher minimum wage rates including, for example:

  • Los Angeles – $14.25/hour for employers with twenty-six (26) or more employees; $13.25/hour for smaller employers
  • San Francisco – $15.59/hour;
  • San Jose – $15.25/hour;
  • Malibu, Santa Monica & Pasadena – $15/hour for employers with twenty-six (26) or more employees; and $14.25/hour for smaller employers; and

H.  Conclusion

When it comes to employment law and HR compliance, California seems to be ever changing, and it can be challenging for even experienced employers to correctly navigate California’s complex requirements.  Regardless, that complexity is here to stay for California employers.  So, if your company conducts (or is planning to conduct) business in California, set aside enough time and resources to make sure that your HR policies and practices meet all of California’s mostly employee-friendly requirements.

C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable.  C2 blog posts are intended for educational and informational purposes only.

Employment-Related Taxes Differ Among the States

If you own a company and have employees that travel, live, and work in different states, have you ever wondered about their state employment-related taxes? For example, if you own a company in Virginia but two of your employees live in Florida, how will they be taxed? Are they taxed based on Virginia tax rates, or Florida’s? A C2 federal contracting client recently raised this issue to us because the client has employees working in about five different states on different federal contracts. Below is the analysis we went through with the client in helping them evaluate the different types of taxes and withholding issues to consider.

A. State Taxes

The majority of states, like the federal government, make individuals pay an income tax; there are only nine (9) states that do not. Those states that have no income tax include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — which leaves forty-one (41) other states that impose an income tax.

In whichever state your employee is working, they are subject to that state’s income tax, unless the state has a reciprocal agreement with the employee’s home state (i.e., state in which they permanently reside). A reciprocal agreement is one in which two states allow residents of one state to request exemption from tax withholding in the other state. There are nine (9) states that impose a flat tax rate, which means everyone in that state pays the same tax percentage. Those states include Colorado, Illinois, Indiana, Kentucky, Massachusetts, Michigan, North Carolina, Pennsylvania, and Utah. The three (3) states with the highest tax rate in the US today are California (13.3%), Hawaii (11%), and Oregon (9.9%), while the three (3) with the lowest tax rates are Pennsylvania (3.07%), Indiana (3.23%), and North Dakota (2.9%).

Major sports teams are a good way to illustrate the issue, because their employees frequently “work” (i.e., play games) in different states. For example, if the Dallas Cowboys play a game in Los Angeles, the players and coaches on their teams will have to pay applicable state income taxes for California on the wages earned in the state. Incidentally, the Oakland Raiders will be the one team who will greatly benefit when it comes to state income taxes. They are moving from Oakland (with California having the highest state income tax rate) to Las Vegas (where Nevada has the lowest income tax rate). A new twist on the tax issue that the athletes and coaches do not like is that there are games being played in London and now even Mexico, where players and coaches have to pay taxes in that country. The taxes are so bad in London that famous athletes like Rafael Nadal and Usain Bolt have refused to play in Great Britain. This year will be the first time in NFL history where a team plays more than one (1) game in London (the Jacksonville Jaguars). The Jaguar players and coaches will have to pay two (2) games worth of Great Britain employment taxes, as opposed to paying zero in taxes had they played those games in their home state of Florida, which does not impose a state income tax.

B. Paid Sick Leave Requirements

There is no federal law in the U.S. that requires paid sick leave. However, many states have passed laws requiring that employees earn paid sick leave. Arizona, California, Washington DC, Maryland, Massachusetts, Michigan, New Jersey, Oregon, Rhode Island, Vermont, Washington, parts of Illinois, Minnesota, New York, Pennsylvania, and Texas all have paid sick leave requirements. Some of these states are even funding the paid sick leave through payroll taxes. California and Rhode Island fund their programs through an employee payroll tax, while New Jersey, New York and Washington state impose payroll taxes on both employees and employers. The D.C. paid leave benefits are funded by a 0.62% quarterly payroll tax on employers, which is based on the immediate past quarter of gross or total wages paid. Wage replacement rates among the states range from 50 percent to 90 percent, while the length of family leave varies from four (4) to twelve (12) weeks (with longer periods for medical disability).

C. Disability Taxes

State Disability insurance sometimes drives another type of payroll tax. There are five (5) states that fund all or a portion of disability payments via a payroll tax on employees and/or employers. Those states include California, New Jersey, Rhode Island, Hawaii, and New York. Within these states, the disability taxes fund either Temporary Disability Insurance (TDI) or State Disability Insurance (SDI), depending on the specific program set up by each state.

D. Workers’ Compensation

Employees catch a break when it comes to workers’ compensation benefits. Such state-derived benefits are funded exclusively by the employers. Workers’ compensation systems vary from state to state, but employers pay for workers’ compensation typically in one of three ways: premiums to a state-run insurance program, payments to an insurance company, or directly to workers (if the company is self-insured). Workers’ compensation is a form of accident insurance paid by employer, so no payroll deductions from employees’ salaries are necessary. Even better for employees, workers’ compensation benefits are not generally subject to federal or state income tax. However, if an injured worker receives both supplemental social security income and worker’s compensation, then they may end up paying some income tax. When an employee receives both benefits simultaneously, the Social Security benefits are taxable to a certain extent.

E. Conclusion

Overall, if you have out of state employees or employees who will be working periodically in other states, their state income taxes can be tricky. Therefore, employers should research the applicable states’ tax laws before onboarding new employees to work there. Finally, check if the state has paid sick leave, disability taxes, workers’ compensation, or other benefits funded via payroll deductions. You should be informed on the different, applicable taxes so that your company is able to remain compliant, as well as provide the correct tax and withholding information to your employees.

C2 provides strategic HR outsourcing to clients who want to develop optimal workforce strategies and solutions to allow them to be more competitive and profitable. C2 blog posts are intended for educational and informational purposes only.