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New Employment Laws for 2020

California has enacted a number of new laws for 2020. Becoming familiar with them will help you stay in compliance and avoid costly penalties. Also, be sure to update your Employee Handbook to reflect the new legislation.

California has enacted a statute, AB5, effective as of last month, that makes it much more difficult to classify workers as independent contractors.

AB5 applies a strict “ABC test” to determine whether a worker is an employee or independent contractor, and puts the burden of proof on the employer. In order to be classified as an independent contract, the worker must meet each of the following:

(A) The worker is free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact; AND
(B) The worker performs work that is outside the usual course of the hiring entity’s business; AND
(C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

There are some exemptions including doctors, dentists, insurance agents, lawyers, accountants, real estate agents, hairstylists, and a variety of creative professionals. AB5 also exempts business-to-business contractors subject to a 12-factor test.

Misclassification can be extremely costly for employers in legal fees, back wages and benefits, and penalties. Now is an ideal time to do an overall review of how you’ve classified your workers. Also, it’s important to consult with an employment attorney if you plan to audit your records and reclassify your contractors.

SB142 – Lactation Accommodation – requires that all employers provide a safe, private and clean lactation room that is not a bathroom. The room must have access to a power supply for breast pumps, and a sink and refrigerator that are close to the employee’s workspace. Additionally, employers must provide reasonable rest breaks to express milk. They must also develop and distribute a policy. Employers may not discharge, discriminate or retaliate against an employee for exercising rights under the law. If an employer denies reasonable breaks or adequate space to express milk, they will suffer the penalty of an additional one hour of pay for each day there is a violation. Employers with fewer than 50 employees may seek an exemption from the requirement.

SB188 – The Create a Respectful and Open Workplace for Natural Hair Act (CROWN Act) – protects employees from racial discrimination based on hairstyle. The law clarifies the definition of race for the workplace and educational institutions to include, but not limited to, hair texture and protective hairstyles, and defines protective hairstyles.

Other changes of note:

The federal minimum salary threshold for exempt employees was increased as of January 1. Note that California employers must comply with the state’s higher thresholds for their employees working in the state. For employers with at least 26 employees, the minimum annual salary for a managerial, administrative, or professional employee in California to be classified as exempt is $54,080 ($49,920 for employers with 25 or fewer employees).

California increased its minimum wage as of January 1 to $12/hour for employers with 25 employees or fewer and $13/hour for employers with 26 employees or more. Several cities within the state also increased their minimum wage. Be sure you are paying employees based on the minimum wage in the city where they work or in the state of California, whichever is higher.

Here’s a reference regarding California minimum wage increments to keep handy: https://www.dir.ca.gov/dlse/faq_minimumwage.htm

The deadline for harassment prevention training has been extended to January 1, 2021 for most California employees.

Thinking of Hiring Employees? Start with a Strong Foundation

One of the things that I think has helped my business grow and thrive for the past 10 years is that I spent significant time at the beginning building a strong foundation.

As I mentioned last time, I went to a SCORE workshop to learn about the requirements (and challenges) of running a small business. I also made sure that I put the proper systems in place to manage my finances, do required reporting, etc. I invested in getting a basic website up and developing quality marketing materials to create Connect to HR awareness. I researched and joined relevant networking groups to build business connections.

Starting and maintaining a strong foundation will help see you through the good times and the challenging ones.

If you have or plan to have employees, there are additional foundational steps you need to take. Here are some key foundational HR items you need to address.

Effective hiring. As you identify the need to hire employees, be sure that you have developed a workforce plan that clearly defines job roles and requirements. Check out my previous blog about effective workforce planning for some tips. Don’t forget, in California there are required notices and forms that employers must provide new hires. Connect to HR offers a new hire tool kit that makes it easy for companies to understand their compliance requirements in the new hire process.

Job descriptions. Detailed and up-to-date job descriptions will help you recruit the right talent and assess their performance. They are also key in ensuring that you are legally compliant. A detailed job description not only protects you when you terminate an employee for non-performance, it also ensures that you comply with the Fair Labor Standards Act (FLSA), the Americans with Disabilities Act (ADA) and other legal requirements.

Goals and objectives. Setting and communicating clear goals and objectives for employees (that are tied to company goals) will help reduce performance issues and keep employees engaged. Goals are a great tool to help monitor performance with clear standards. We suggest you review them with employees monthly, at a minimum, to ensure they are still relevant over time.

Labor law posters. Be sure you post all the required federal and state employment posters and have a system in place for managing your HR records. These posters are required for all businesses with two or more employees.

Employee Handbook. It’s important to have an Employee Handbook that includes basic employment policies as well as policies specific to your company. You can avoid employee and legal issues if you clearly communicate expectations about work hours, conduct, etc.

Health and safety. Company management is responsible for creating and maintaining a safe and healthy work environment. In California, all employers should have an Injury Illness and Prevention Program (IIPP).

Terminations. Just as it’s important to have an effective hiring process, it’s important that you have an effective (and legally compliant) process for terminating employees. Creating and following a Termination Checklist will help ensure that you cover all the bases. Terminating an employee is never easy, but putting some structure around it can make it less stressful for both you and the employee.

Please reach out to me at michelle@connecttohr.com if you need guidance on any of these items.

Connect to HR is Celebrating its 10th Anniversary!

It’s hard to believe, but it has been 10 years since I decided to leverage my human resources experience and start my very own business – Connect to HR.

It hasn’t always been easy, as you business owners will know, but it has always been gratifying, educational and inspiring! Having my own business has been like getting an MBA. It’s been the best teacher and has pushed me outside of my comfort zone.

This is the first in a series of blogs about my journey as a small business owner. Along the way I’ll be sharing some tips and lessons learned – how to get off to a good start, how to stay motivated, how to deal with setbacks, how to evolve to meet client needs, and more.

Before Connect to HR

After years of working in senior-level positions for large corporations across a variety of industries, I decided to leave the corporate world in search of work-life balance and a different work environment. Shortly after leaving, I had the opportunity to do some consulting work. One of my consulting engagements was with Apple, who had been around for a while, but still had that “start-up” feel. I was fortunate to do three consulting projects around the time Apple was reinventing itself and launching its first versions of the Apple iPod, iPad and iPhone. In between these projects, I had an opportunity with a nonprofit that was looking for someone to set up their human resources fundamentals. They wanted someone who could work in a small organization, but who had the experience of a larger, more established environment. I went from being part of an HR team to an HR Department of one. It was challenging and exciting and really honed my ability to be resourceful to get things done.

Other consulting opportunities followed, and I realized two things: 1) There was a big need for compliance experience. We were just coming off the downturn, and many companies had neglected that aspect of HR. And 2) I no longer wanted to work through someone else and lose part of the profit from my consulting gigs.

It was time to start my own business. In 2010, Connect to HR was born.

Getting Started

Running your own business requires you to wear many hats – management, marketing/sales, finance, administration, accounting, IT the list is long – in addition to actually doing your core work. SCORE is a great resource for small business owners. They have workshops on a variety of business topics and even offer experienced businesspeople as mentors. I learned a lot from their small business fundamentals workshop, and later had the opportunity to present a workshop on HR fundamentals for small businesses at SCORE for 4 years.

The human resources function is pretty broad, so one of the first steps was for me to decide on my focus area. I had worked in all aspects of HR, but was particularly interested in the legal area. In fact, at one point I had contemplated attending law school. Also, in the consulting work I’d done it was clear that there was a demonstrated need for compliance.

I decided that these three areas: employee relations, compliance and policies and procedures (Employee Handbook) would be my starting point, and I was off to the races!

Tips for getting started: Learn the fundamentals of starting a business. Be clear about your focus.

Tune in next time when I’ll share about acting on inspiration.

Happy Holidays from Connect to HR

Season’s Greetings from me and my team at Connect to HR. It’s hard to believe that another year and decade are coming to an end. 2019 has been an incredibly exciting year! I’ve had the opportunity to work with amazing clients as an executive coach. I’ve been fortunate to help many of them grow professionally and stretch themselves in new and exciting ways. The results are more engaged and motivated leaders, which in turn benefits the organizations they serve and inspires the employees who work with them.

In addition, I continue to provide HR advising work to organizations. Several clients who have experienced tremendous growth and change over the past 3 to 5 years have called upon me to help strategize the next phase in their company’s development. In some cases, it’s to develop a succession plan to eventually hand off their organization to the next generation of leaders as they take on more strategic roles. The best compliment I was given this year is when a client said, “You are my business advisor, not just an HR consultant.”

2020 is the dawn of a new decade and also a celebration of the 10 year anniversary of the founding of Connect to HR. Ten years ago, I had the idea to start this business. I’m excited that Connect to HR has flourished and continues to evolve and change to better serve all of my incredible clients. I’m so grateful to all the clients who have partnered with me over the past 10 years. Many of them are now good friends and associates.

A village has supported me throughout the years. I’m thankful for my team, which consists of Project Management Specialist (Janine, Linda and Lillian), Leslie Flowers, Jen Fery, and Colleen Lopez who have partnered with Connect to HR over the years in accounting, marketing, and administrative support. Also, I have an amazing community of colleagues who serve as my unofficial board of directors. I appreciate your being my sounding board and encouraging me. Thank you for trusting Connect to HR with your referrals.

I want to specifically recognize several special colleagues: the BABS, Affogato HR Consulting, the 415-408 club, Kristi Mack, my former BNI group and my colleagues from PICA (Susan Nelson, Jane Hintz and Liz Steblay). Additionally, I’ve been fortunate to have mentors over the last decade who helped guide me and my business. Thank you to Silvia Johnson, Lisa Duerre, Bill Baren, Patrick Dominguez, Bill Silverman and Scott Bowman. You have inspired me to make this endeavor a successful business. Most importantly, my family has been my support system through the good times and the low times. I am thankful for the love and encouragement that my husband, son, parents and sister give me every day.

I’m excited for what the future holds. I see many exciting opportunities for Connect to HR and my clients. Cheers to a new decade! Wishing you continued success in 2020.

Michelle Mendoza and the Connect to HR team

P.S. Also, I’d love to hear from you and catch up in the New Year. Let’s grab a lunch or coffee (even if it’s by phone) and connect.

Time to Review Your HR Year-End Checklist

There are just a few weeks left until the holidays and year end. Before you get caught up in all the festivities, it’s a good idea to set aside some time to make sure you have addressed any outstanding HR issues for 2019, and have finalized your plans for 2020 and the new decade.

Be sure you have made the appropriate adjustments to comply with recent legislation, specifically:

The deadline for harassment prevention training has been extended to January 1, 2021 for most California employees.

California has enacted a statute that makes it much more difficult to classify workers as independent contractors, effective January 1, 2020.

The federal minimum salary threshold for exempt employees is being increased, effective January 1, 2020.

California is increasing its minimum wage again as of January 1, 2020. Several cities within the state also are increasing their minimum wage.

Here’s a checklist of other items to complete before year end. Be sure to add any items relative to your particular business that you don’t see here.

Order any updated Federal and State Labor Law Posters
Review your Employee Handbook to identify any changes needed based on new laws, policies and/or procedures
Review and update employee addresses in preparation for W-2 distribution
Review and update job descriptions
Finalize the HR Budget for 2020
Finalize focal process for 2020
Finalize company goals
Determine dates of company holidays for 2020
Finalize and announce any new benefits/employee perks for 2020
Renew any annual memberships and subscriptions
Schedule annual reviews with employees
Deal with any lingering employee relations issues

In addition, think back over the year and reflect on what went well and what didn’t go well from an HR standpoint. Are your employees engaged and productive? If not, do you see any trends that you could work on turning around in 2020? Are there any employees who stand out as particularly high potential? How will you develop and retain them in 2020?

This is also a good time to look back over the past decade. Reflect on how your organization has changed and celebrate your accomplishments over the past decade. Also, consider what you want to usher into the next 10 years. If you don’t know where to start, consider conducting a SWOT analysis in the New Year. This way, you can become aware of trends both inside the company as well as in your industry.

Giving some thought to these things now, and then putting a plan in place to address them after the first of the year will get 2020 off to a good start!

I would love the opportunity to help you plan for 2020 and the next decade please contact me at michelle@connecttohr.com.

Tips for Performing an Effective SWOT Analysis

In my last blog I talked about the benefits of taking some time to review your business by performing a SWOT Analysis. This will help you plan for next year and beyond as you understand your Strengths, Weaknesses, Opportunities and Threats.

This time I’d like to give you some best practices to help you get the most out of your SWOT Analysis. Here are some tips about what you should do and not do as you are performing your analysis.

Do:

Get multiple perspectives by gathering input from employees, customers, suppliers, and partners.
Involve more than one person in the analysis. It’s also helpful to include someone external to the organization who can help you look at things objectively.
Use the goals and objectives from your overall business plan in your analysis.
Be forward-thinking. Where are you today, where do you want to be next year, in 5 years, in 10 years?
Create a clear definition of what a strength is as opposed to a weakness. Apply the definition consistently. Likewise, establish clear definitions of an opportunity vs. a threat.
Benchmark your strengths or weaknesses in comparison to your competitors.
Establish a process (and responsibility) for keeping abreast of what your competitors are doing and identifying any changes in the market.
Be realistic about how your business compares to your competitors.
Keep your SWOT short and simple but be sure you include all critical details.

Don’t:

Rely on opinions. Instead, focus on facts.
Limit input to just a few people.
Make too long of a list of suggestions under each category. Prioritize your list to those that are most critical and financially feasible.
Hesitate to admit weaknesses. Identifying them is the first step in improving.
Forget to include both technical skills and soft skills as you consider the skills you need going forward.
Use your SWOT analysis as your only planning tool. Combine what you learn from your SWOT with other business planning tools.

Please feel free to reach out to me at michelle@connecttohr.com if you need some help in putting together your SWOT analysis.

Accelerate Your Business Through a SWOT Analysis

As we approach the end of the year, it’s a good idea to set aside some time to reflect on your business and prepare for what’s next. What is going well? What needs to change? What are the company’s strengths and what are the opportunities for improvement?

I’m working through this process with one of my clients. They have grown significantly over the past three years, more than doubling the number of employees. They are looking at adding some new business offerings and want to make sure that they have the right administrative functions, skills and organization in place to support them.

To determine this, we’re using a simple but powerful tool called a SWOT analysis. “SWOT” stands for Strengths, Weaknesses, Opportunities and Threats. By taking an objective look at each of these areas as they pertain to the company, we can identify any gaps and then strategize how to fill in those gaps.

The Strengths and Weaknesses components require looking inward – evaluating things you have control over and can change. For example, your processes, location, team. The Opportunities and Threats components require looking outward – external forces you may not be able to control, such as competitors, customer buying trends, new regulations.

Key to an effective SWOT analysis are good questions and honest, well thought out answers. Here are some examples of questions.

Strengths:

Which of our processes are working effectively?
What are the strengths of our team, e.g., experience, knowledge, level of education, skills, network or reputation?
What are our tangible assets, e.g., customers, technology, equipment, capital, or patents?
What is our competitive advantage?

Weaknesses:

Which of our processes are not working?
Are there skill, knowledge or experience gaps on the team?
What assets are we lacking, e.g., capital, equipment, up-to-date technology?
Is there something within our control that is holding us back from being competitive?

Opportunities:

Are there recent changes in the market that could create an opportunity?
Is the timing critical to take advantage of that opportunity?
What events are coming up that we could leverage to grow the business?
Are there any impending changes to regulations that could work in our favor?

Threats:

Who are our current and potential competitors? What are their strengths?
Is there potential for a significant change in prices or availability of key suppliers?
Are there shifts in customer buying trends or the economy that could impact revenue or profits?
What other factors beyond our control could put the company at risk?

Of course, you’d want to add more questions that are specific to your business. Understanding your company’s strengths, weaknesses, opportunities and threats will help you make informed decisions about what you need to do to take your business to the next level.

Next time we’ll talk about some specific things to do and not do in your SWOT analysis.

Please contact me if you need help in going through the process.

New Federal Salary Threshold for Exempt Classification

As of January 1, 2020, the federal salary threshold for employees to qualify as exempt from overtime will increase from $455 per week ($23,660 per year) to $684 per week ($35,568 per year). For employees to qualify under the Fair Labor Standards Act’s (FLSA) “highly compensated employee” exemption, the minimum salary threshold will increase to $107,432 per year.

As a reminder, for an employee to be classified as exempt, they must meet both the minimum salary requirement and the “duties test.” This new law does not make any changes to the duties test.

It also does not affect employees in California, where the exempt salary threshold is higher.

California employers must comply with the higher thresholds for their employees working in the state. The minimum annual salary for a managerial, administrative, or professional employee in California to be classified as exempt is $49,920 ($45,760 for employers with 25 or fewer employees). Also, California does not recognize the “highly compensated employee” exemption.

Another difference is that the federal law allows for bonuses, commissions and incentives that are paid at least annually to be counted toward the minimum salary requirement. California makes no such provision. And California’s duties test is stricter than the duties test under federal law. Here, an employee must spend more than 50% of their time in each workweek performing exempt duties to qualify as exempt from overtime.

If you have employees outside of California now is the time to review your compensation plans for exempt employees and make any changes needed to comply with the new federal law by January 1.

If you only have employees in California, it’s also a good time to review employee compensation and classification to ensure you are complying with California law.

Please reach out to me at michelle@connecttohr.com if you need help reviewing employee classifications.

New Law Impacts California Independent Consultants

As we head into the fourth quarter of 2019, there are a couple of legal updates you should be aware of.

First, Governor Newsom has signed into law AB 5, which further clarifies the distinction between employees and independent contractors. The law goes into effect on January 1, 2020 and is expected to have a big impact on gig-economy companies like Lyft and Uber, as well as app-based services that depend on contractors such as food delivery and dog-walking services.

Second, the deadline for harassment prevention training (now required for all employees of companies with 5 or more employees including independent contractors) has been extended to January 1, 2021. This will allow more time for large employers who previously only trained supervisors to train their other employees and for smaller companies to train both supervisors and employees. As a reminder, training for supervisors must be at least two hours, and training for non-supervisors must be at least one hour. Training must be repeated at least every two years. Remember to keep records of training for both employees and supervisors.

AB 5 adopts the “ABC” test, which I wrote about earlier this year, to determine whether an individual is an employee or an independent contractor.

Under the ABC Test, in order to classify a worker as an independent contractor the hiring entity must establish that the worker meets EACH of the following three factors:

The worker is free from the control and direction of the hiring entity in the performance of the work, both under the contract for the performance of the work and in fact; AND
The worker performs work that is outside the usual course of the hiring entity’s business; AND
The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

One of the things I tell clients is that it’s essential to consider how you define your core business (2) and how does the worker assist you in that core business.

The new law allows for a few exceptions for positions that are subject to the 9-factor Borello test. Some examples of positions that fit into this category are: insurance brokers, physicians and surgeons, hairstylists, attorneys, and accountants.

Please feel free to contact me at michelle@connecttohr.com if you need assistance.

Tips for Transitioning from Coworker to Leader

You’ve been working with the people on your team for three years, and now suddenly you’re their leader. Are you excited? Of course. A promotion is a step in the right direction. And are you somewhat nervous? Absolutely. Moving from coworker to leader adds an extra level of stress to the challenge of any new position. Here are some tips that will help make your transition smoother.

Meet with the team. The formal announcement of your promotion should come from HR or your manager. As soon as it does, however, schedule a meeting with the team to talk about the transition and allow some open discussion about concerns or issues. This will be your earliest opportunity to establish some authority and credibility as the leader, so be careful not to let this meeting turn into a gripe session. Focus on talking about your leadership style, what your expectations are of them, and what they can expect from you. This is also a good time to share with the team your 90-day plan and what your leader’s expectations are of you.

Pace yourself. As a team member, you probably noticed a lot of things you’d like to change, given the opportunity. Don’t make big changes too quickly. Based on input from the team, consider some quick successes you can achieve to help establish your credibility and team confidence.

Step back. You’ve probably established some personal relationships among the team. As their leader, you’ll need to step back a bit to avoid the appearance of favoritism. This will be especially important if there was someone else on the team who wanted your position and may harbor some resentment. If you know that someone else on the team wanted the position or was being considered for it, make an opportunity to have a private discussion with them to acknowledge their value to the team and enlist their support.

Get training. Take advantage of any leadership development opportunities offered. Leading people has many rewards, and also many challenges. You can’t be expected to instantly know how to handle all of them. Leadership training and networking with other leaders will strengthen your ability to deal with issues as they arise.

Consider an executive coach. A coach can help you hone the particular skills you will need in your new role. Having outside support and constructive feedback from someone can help you grow as a leader and learn effective approaches to leading and developing others.

Ask for feedback. Let your team know that you believe in two-way communication and are open to hearing their positive and constructive feedback. Creating an environment of honest, open communication is one of the best ways to succeed as a manager.

Consider getting a mentorship from a Senior Manager within the company whom you trust. A mentor can serve as a sounding board as you encounter new experiences and challenges. They can give you suggestions on how to handle a given situation. They may also be able to provide you with sound advice and even access to resources.

Contact me for more information on leadership development and coaching. You can also read these articles for more information: Get the Best from Your Team – Be an Effective Coach, The Best Leaders Continue to Learn, Successful Leaders Listen More, Talk Less.