GOVERNOR BROWN SIGNS 15 NEW LAWS, 5 WITH PREVAILING WAGE REQUIREMENTS

This past week, Governor Brown signed 15 housing bills into law.  5 of them include a prevailing wage component that goes into effect January 1, 2018.

California has a definite housing problem.  Right now there is a need for 180,000 homes and only 88,000 homes are being built in an average year.

Existing law already requires that prevailing wage be paid to workers on State financed project (ever wonder why it costs so much for the State to do anything?).  This new legislation reaches over into the private sector to tell them how much they must pay everyone and extends the influence of Unions into non-union work-places.

Prevailing wages have been around since the 1930’s and were used to kick-start the economy with projects such as the Hoover Dam.  As an example, if you are a bricklayer in Sacramento, the prevailing wage is $70 per hour.  In San Francisco, that may be $90.  And, of course, there is the story of the person who was paid $46 per hour to vacuum at a construction site because that is the prevailing wage for clean-up work.  The Janitorial description would have been much less at around $12 per hour.

An analysis of the cost of prevailing wage on the average home in California reveals the following:

  1. Almost all employees will be paid a much higher wage.  The range is an increase of 39% for electricians to 116% for construction labor.
  2. The overall increase in labor cost for residential construction would be 89%
  3. Labor accounts for about 41% of the cost of an average home, so this would mean an increase in the total construction cost of 37%
  4. Put into monetary terms, if the average cost of home construction is $88 per square foot, the 37% increase would add another $32 per square foot for a total cost increase on the average home of $84,000!

Proponents of the bills say the cost will be mitigated by the fact you are hiring professionals who will work faster, more efficiently, with less errors in the construction process.  However, they have no significant evidence to back up this assumption.  Rather, I refer you to the Bay Bridge retrofit project in San Francisco built by Union workers and under prevailing wages that is crumbling and needs millions of dollars to be fixed.  I also refer you to our present high-speed rail project with it’s original cost going from $9 billion to $65 billion (or more) as costs continue to rise.  These projects do not support the idea that if you pay a person more, they will save you money.

So far, these bills only apply to projects that take advantage of certain State fast-track waivers for environmental reviews and permitting process.  However, based on past history, the next round of legislation may be to impose prevailing wage on all “trades” work.  And, it may reach over to regular private work that is not regulated by State laws.  It could move next to any work permitted by the county, city or municipality.  The cement slab you want for a patio may double in cost.

This is a long, slippery slope that has no factual standing.  At the end of the day, there may be no increase in building homes because the cost savings of fast-tracked government regulations may not off-set the increase labor costs.  In fact, it may not even off-set the increased worker’s compensation insurance costs associated with the significant increase in wages.  If labor costs increase 87%, then worker’s comp costs will almost double for the contractors.  Also, there is an a large increase in payroll taxes associated with the increased payroll.  The State likes that.

So, what we have here is another example of legislation written to make the Politicians look like they are doing something, and appeasing their select groups (unions).  But, there is very little evidence it will actually improve the housing problem in California and even less chance that those homes will reduce the cost of housing.  We will have to wait and see what comes next.

OUR ARTICLE IN PROGRESSIVE DAIRYMAN (not just for Ag)

We were recently honored to be asked to contribute to one of the most widely circulated magazines in the dairy industry.  This is the first of 2 articles we have written for them.  This information is universal and not just for Agriculture employers.  We hope it is useful to you.

You may use this link to go to the article:

http://canada.progressivedairy.com/topics/management/new-osha-rules-emphasize-injury-reporting-discourage-retaliation

Please let us know what you think.  There is a comment section at the bottom of the article.

Thank you

 

 

100% HEALED BEFORE RETURN TO WORK POLICY IS NOT LEGAL

Blanket policies that say an employee must be 100-percent healed before he/she can return to work after an injury are unlawful. Instead, you must assess whether the employee can perform the essential functions of the job with or without reasonable accommodation.

The Department of Fair Employment and Housing (DFEA) is the California equivalent of the EEOC Federal agency. Recently, there has been increased use of the Americans with Disabilities Act (ADA) in conjunction with worker’s compensation injuries. Specifically, employers must make a reasonable effort to accommodate modified duty or they are not complying with the ADA.

The Fair Employment and Housing Act (FEHA) prohibits discrimination against employees with disabilities and requires employers to provide a reasonable accommodation to allow qualified employees with disabilities to perform their jobs.

“Whenever an employee with a disability seeks an accommodation, the employer has a duty to provide an individual assessment to determine if that employee can perform the duties of the job, with or without an accommodation,” said DFEH Director Kevin Kish.

Policies requiring employees to be ‘100% healed from injury’ in order to work deny employees their right to an individual assessment and violate the FEHA.”

A recently resolved case cost the employer $250,000 and a number of policy changes and required training of management staff.

Our Worker’s Compensation personnel are willing to work with you and your adjuster to come up with ideas to allow the employee to work while recovering.

OSHA FINALIZES RULES FOR DRUG TESTING AND SAFETY INCENTIVES (UPDATED SEPT 1, 2016)

 

 Edit Sept 1, 2016…The information below has been adjusted since our posting and the new rules go into effect as of November 1, 2016 instead of August 10.

Due to the major changes listed below, HR Mobile Services, Inc. will be adjusting all of our Drug and Substance Abuse Policies to better reflect these changes.

This is from the rewriting of (29 CFR 1904.35(b)(1)(I) and subsequent commentary letter issued by OSHA in May, 2016.

Back in 2006, OSHA issued a paper that took at dim view of Safety incentive programs.  The general idea was that if there were no injuries reported for a month or a quarter, there would be a drawing for prizes such as a TV or gift cards.  While this was done with good intentions that employees would work more carefully so that everyone would have a chance to win valuable prizes, it also had an impact (intended or not) on the reporting of injuries.  The letter went on to point out that an employee could be put under increased peer pressure not to report an injury and that was not acceptable.  The new rule specifically prohibits employers from using incentive programs that discourage injury reporting.  THEY ARE NOT BANNING INCENTIVE PROGRAMS!  Programs could include:

  • –   Providing t-shirts to workers serving on safety and health committees or to celebrate a goal being reached
  • –   offering modest rewards for suggesting ways to strengthen safety and health
  • –   throwing a company or department wide recognition party after the successful completion of safety training

The final ruling goes into effect on Nov. 1, 2016.  The final rule explicitly incorporates “the existing prohibition on retaliating against employees for reporting work- related injuries or illnesses that is already imposed on employers”.  You can bet that lawyers will be quoting this and inquiring into incentive programs when filing a 132-a or EEOC discrimination case.  BE CAREFUL.  If you are not sure of your program, give us a call.

ALSO………..

OSHA has determined that blanket application of a company post-injury drug test policy may not be legal because it may deter an employee from reporting an injury.   Employers are prohibited from using the drug testing as a threat to employees who may want to report and be treated for an injury.

Where this can happen, and you need to address this with your supervisors, is when the supervisor says to the employee, “you can be treated at the clinic, but you know they are going to test you for drugs and alcohol and if they find anything you will be fired”.  That is a threat and is illegal.  You must make sure your people know that comments like this expose your company to major fines.

Further, drug testing after an accident is only allowed when 2 situations are present.  The first is that the injury MUST be associated with an action on the part of the employee that could have been connected to a drug or alcohol impairment.  That is to say, if an employee is stung by a bee, there is no connection to unusual behavior due to being under the influence and so there is no reason to apply a drug and alcohol screening test.  If the employee was swinging a stick at a bee hive and got stung, there may be a good reason to have them tested.  If a tree branch falls on an employee, no test.  If an employee is climbing a tree for fun during lunch, maybe there is a reason for testing.  If an employee has a back strain or a cut due to a missing guard on a piece of machinery, there is not a good reason to drug test.

The second part of this is that the testing should only be done when it can accurately identify impairment caused by drug use.

So, you need to be reasonable in your application of testing employees and you cannot use it as a threat to not report.  You still need to follow DOT rules because they may override some of these situations.  All DOT accidents require post-accident testing and in most cases would meet the standard above in either case.

CALIFORNIA TO RAISE MINIMUM WAGE YEARLY TO $15 PER HOUR AND BEYOND……..

Governor Brown, today, will be announcing an agreement reached between the State Legislature and 2 major Unions in California regarding minimum wage.  The unions had registered 2 differing minimum wage initiatives and got them on the California ballot, thus going around the State Government to let the people vote on the idea.

According to news reports, the negotiated deal would boost California’s statewide minimum wage from $10 an hour to $10.50 on Jan. 1, 2017, with a 50-cent increase in 2018 and then $1-per-year increases through 2022. Businesses with fewer than 25 employees would have an extra year to comply, delaying their workers receiving a $15 hourly wage until 2023.

Future statewide minimum wage increases would be linked to inflation, but a governor would have the power to temporarily block some of the initial increases in the event of an economic downturn.

While we have often written here that we oppose minimum wage increases without acknowledging the other “hidden” costs such as large increases in Worker’s Comp costs, this may be the better of the choices available.  The other initiatives on the ballot would have raised the minimum rate more rapidly so the next 2 years we only get a .50 raise each of the first 2 years.

Of course, by 2022, $15 will not raise anyone out of “poverty” since the line will rise as well, so by then the new chant may be $20 per hour.  And so it goes…..

Its backers are hopeful that the final agreement will allow them to formally withdraw that initiative in a few weeks.

“We want to look at the details first,” said Steve Trossman of Service Employees International-United Healthcare Workers West.

Sources say the Legislature could vote on the wage compromise as soon as the end of next week by amending an existing bill on hold since 2015.

It is of note that NO BUSINESS OWNERS OR ORGANIZATIONS WERE INCLUDED IN ANY OF THESE DISCUSSIONS.  So much for open and transparent government!!

We will continue to monitor this law as it is rewritten and passes through the Legislature to the Governor’s desk.  Then we have to hope the initiatives are pulled from the ballot as well.  Stay tuned……

REST PERIOD BILL ON GOVERNOR’S DESK – AB 1513

SEE UPDATED INFORMATION DATED 1/24/2017

News came down yesterday that there has been negotiations going on between AG attorneys and the State regarding rest periods and employees who are paid by piece-rate, or truckers by the load. As we discussed before, you have to establish a pay rate for when an employee is supposed to take a paid rest break even if they are paid by the load. So the good news is there is some recognition of the problem and a partial solution is headed to the Governor’s desk, but it is several pages and I have not had a chance to digest it all yet. It is called AB 1513 (March 5, 2015). It actually is also combined with changes to Worker’s Compensation where you may also have a problem establishing the pay rate for people when they are injured and cannot work. How do you figure the rate of Disability compensation for piece rate or commission sales employees.

 

There is a lot of complicated language in the 7 page bill, but a couple of things I do see, includes a provision that you may pay employees for non-productive time at a rate of at least the minimum wage or an average of the money an employee earns in a work week divided by the number of hours worked, minus any time spent in non-productive time. It does say that you will need to have a better system for documenting non-productive and rest period time if you are paying that separately from an hourly worker. It will require that you show the amount of rest or cool-down time you are paying for on a separate line on the paycheck stub.

 

You can read more here: https://asmdc.org/members/a37/news-room/press-releases/piece-rate-worker-compensation-bill-to-governor-s-desk

 

As I said, I do not have any big answers right now and there is no guarantee it will be signed (though it is very likely).  Once it takes effect, we will have a little more clarity and I will be able to enlist the help of attorney’s.  Still, I thought it was important to bring to your attention.

NEW HEAT BREAK RULES SIGNED INTO LAW

Governor Brown of California signed SB435 into law effective next year.  It states that workers exposed to extreme heat must be granted cool-down periods during the work day.  If the employer does not provide such a cool-down period, they must pay the employee for an additional hour of work for each day the rest period is not provided. 

We are still awaiting the regulations surrounding this law.  Questions that arise include the definition of “extreme heat” and how the employer is to document that the employees took a cool-down rest period.

HR Mobile services will continue to monitor this new law and provide advise to our customers on how to best protect themselves.  We invite your questions and comments on this legislation.

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