The HR landscape is ever evolving with new employment laws and regulations, innovations in technology and other emerging trends in the recruitment and management of employees. On top of federal requirements, employers in California have a complicated set of state laws to navigate, with strict limits on work hours, hiring practices, discrimination, harassment and other provisions. California is considered one of the most employee-friendly states in the U.S. which makes it a favorable environment for workers but can create unique challenges for the business owners that employ them.
Managing human resources can be daunting for even the most experienced employer to handle on their own, but many small-to-medium sized businesses can’t afford to hire in-house HR staff. Trying to keep an organization compliant while also focusing on recruiting, hiring and managing a workforce can take a lot of the focus away from growing the business, increasing profitability and furthering a company’s missions and goals. On top of that, new laws went into effect on January 1st, 2020 that add even more compliance challenges to employers’ plates. Here are some of the top HR challenges that California employers are facing in 2020:
The passing of Assembly Bill 5, which went into effect January 1st, 2020, has caused an uproar across multiple industries while both employers and contractors are forced to adjust to the changes. AB codifies a previous decision made by the California Appeals Court to adopt the “ABC Test” for determining worker classification. Only seven categories of occupations or businesses are excluded from having to adhere to the test, leaving many workers and industry groups fighting for better clarification. In the meantime, employers have had to drastically change their approach regarding 1099 employment, leaving many contractors without work.
Sexual Harassment Training
Sexual harassment training became mandatory for all employers in California with at least 5 employees after former governor Jerry Brown signed Senate Bill 1343 into a law that went into effect on January 1st, 2019. Employers were given one year to comply, but another new law, SB 778, went into effect on January 1st, 2020 to clarify some of the requirements and give employers one additional year to ensure employees complete the required training and obtain proof of compliance.
Retaining talented, quality employees can be extremely difficult in a time when unemployment rates are low. California is currently holding a record low 3.9% unemployment rate. Highly skilled employees know they are at an advantage and may be looking for career opportunities that include better benefits, flexible hours, better work/life balance and a more diverse workplace culture. In order to improve employee retention in 2020, employers need to innovate their recruiting and employee engagement strategies.
In relation to the topic of turnover and retention, benefits remain a top consideration for workers when deciding whether to accept a job offer or stay in their current position. Premiums for employer-provided healthcare plans rose 5% in 2019, making 2020 benefits even more costly. California also announced that Association Health Plans (AHPs) will no longer be issued, amended or renewed in the state effective July 1st, 2020. AHPs have commonly been used by small businesses and self-employed workers to group together and obtain healthcare coverage as if they were a single large employer, but this option will no longer be available.
Wage and Hour Compliance
The Fair Labor Standards Act (FLSA) is a complex set of labor laws that sets the policies for minimum wage, overtime pay, record keeping and other employment standards that affect employees in the private sector as well as in Federal, State, and local governments. Non-compliance can result in costly penalties, back wages, back taxes and legal fees for the employer, which seem to get more expensive each year.
Changes to Cal/OSHA Reporting
On January 1, 2020, changes to Cal/OSHA’s reporting requirements went into effect, making them even more specific than before and adding confusion for employers in the state who are struggling to juggle compliance. In California, employers are required to “immediately” notify Cal/OSHA in every case involving death, serious injury or illness. Immediately in this case means as soon as possible, but no longer than eight hours from the time of the incident.
Health and Safety Policies
The global Coronavirus outbreak has dominated public conversation over the first few months of 2020. Employers are now facing the challenge of expanding their health, safety and leave policies to better protect employees from being exposed to and transmitting communicable diseases and lessen the impact on their business when large-scale quarantines are imposed. More employers are encouraging telecommuting and other uses of technology to allow workers to avoid unnecessary travel and adhere to health agency recommendations while still remaining productive.
California employers have a large pool of foreign-born workers to recruit from, which leaves them at risk of making errors in the Form I-9 filing process. Because of this, they are more likely to be targeted for I-9 audits, and any mistakes in the filing or record keeping of these forms can bring about costly penalties. A new form I-9 was released for 2020, and beginning on May 1st of this year, employers will only be given the option to use the electronic version for new hires.
Managing the HR Burden
The HR challenges that employers are facing in 2020 can be incredibly overwhelming to manage and can lead to costly mistakes that many small business owners can’t afford to make. HR outsourcing is a great tool for business owners to help them navigate the complicated HR landscape and minimize risks and compliance issues so they can focus on growing and running a successful business.
Since 1995, Emplicity has provided a smarter, more secure, and integrated platform of employer services to its 300 business clients and their 8,500 employees. As a Professional Employer Organization, or PEO, the California-based HR outsourcing firm simplifies the compliance, administration, and support businesses need in the areas of employee benefits, payroll, and human resources technology.
NOTICE: Emplicity provides HR advice and recommendations. Information provided by Emplicity is not intended as a substitute for employment law counsel. At no time will Emplicity have the authority or right to make decisions on behalf of its clients.