2015HUMANRESOURCESUPDATES

• Paid Sick Leave

• Legalization of Marijuana

• EEOC Pregnancy Guidance

• Social Media and Hiring Decisions

• New 2015 California Employment Laws

• California Workers’ Compensation Rates Highest in the Nation

• IRS Increases Maximum Employee Contribution to Health Care FSAs

• State Minimum Wages

• 2015 Training and Development Webinar Schedule

INSIDE:

WHAT’S NEW IN LABOR AND EMPLOYMENT LAW IN 2015?There were major forces at work this past year that have made the labor and employment landscape in 2015 more dynamic and unpredictable than in recent years. A volatile political climate, still-sluggish economy, historic swing in the mid-term elections and aggressive federal initiatives have left many employers wondering what 2015 holds in store. In this report, we cover some of the hottest employment and health care trends, plus new payroll, tax and benefits information.

STATE MINIMUM WAGES

ALASKA $7.75 | $8.75 eff. 1-1-15

NEBRASKA $7.25 | $8.00 eff. 1-1-15

MINNESOTA$8.00/$6.50 | $9.00 eff. 8-1-15Small Employers: $7.25 eff. 8-1-15

VERMONT $8.73 | $9.15 eff. 1-1-15

SOUTH DAKOTA $7.25| $8.50 eff. 1-1-15

ARKANSAS $6.25 | $7.50 eff. 1-1-15

HAWAII$7.25 | $7.75 eff. 1-1-15

CONNECTICUT $8.70 | $9.15 eff. 1-1-15

RHODE ISLAND $8.00 | $9.00 eff. 1-1-15

NEW YORK$8.00| $8.75 eff. 12-31-14

MARYLAND $7.25 | $8.00 eff. 1-1-15 Small Employers: $8.25 eff. 7-1-15

WEST VIRGINIA$7.25 | $8.00 eff. 12-31-14

DELAWARE$7.75 | $8.25 eff. 6-1-15

MASSACHUSETTS $8.00 | $9.00 eff. 1-1-15Small Employers: $7.25 eff. 8-1-15

STATECurrent Minimum Wage| New Minimum Wage

STATES WITH NEW MINIMUM WAGES

Currently, 24 states maintain minimum wages above the federal minimum wage of $7.25.

Effective January 1, 2015, 14 states raised their minimum wage.

18 states match the federal minimum wage. 3 states have rates lower than the

federal minimum wage.

5 states have not established a minimum wage.

14 2418

53

LEGAL MARIJUANA: A New Challenge for Employers?Voters in two states, Oregon and Alaska, as well as the District of Columbia, approved the use of recreational marijuana. They join Colorado and Washington which passed similar laws in 2014 and 2012, respectively. This is in addition to 24 states that have legalized marijuana use for certain medical purposes.

Each state permits adults 21 and older to possess varying amounts of cannabis (ranging from one to eight ounces) and to grow up to six marijuana plants. Oregon and Alaska permit the production and sale of marijuana, which will be taxed, while Washington DC does not.

Business owners in states that permit recreational or medical marijuana use may rightfully be concerned about the impact it can have on their operations. While state

law may permit individuals to use marijuana for certain purposes, employers should recognize they still have the right to maintain a drug-free workplace. They should create a workplace policy which unequivocally states that it is forbidden for an employee to possess, use or be under the influence of marijuana in the workplace. In addition, employers are most likely not required to accept marijuana use as a reasonable accommodation.

While the growing use of marijuana may concern some business owners, well-written and enforced policies should limit the impact of this new trend on employee performance and overall operations.

PAID SICK LEAVE: A Growing Trend on the State & Local Level

A new employment trend seems to be emerging across the country: mandatory paid sick leave. California and Massachusetts became the second and third states, respectively, to guarantee paid sick leave to most employees in their state. The first state was Connecticut which enacted the law in July, 2011.

The California law provides that most employees who work for at least 30 days are entitled to paid sick leave, accruing at a rate of at least one hour for every 30 hours worked. An employer can cap an employee’s use of paid sick days to 3 days (24 work hours) per year.

The Massachusetts law requires employers with 11 or more employees to provide up to 40 hours of paid sick time to each employee per year.

Employers with 10 or fewer employees are not required to offer paid sick leave under the law. Both the California and Massachusetts paid sick leave laws will take effect on July 1, 2015.

Several municipalities also enacted their own paid sick leave policies. Oakland joins fellow-California cities San Francisco and San Diego. Trenton and Montclair, New Jersey join a host of New Jersey cities with paid sick leave policies already in place: East Orange, Irvington, Jersey City, Newark, Passaic, and Paterson. Seattle, Washington, New York and Washington D.C. also have paid sick leave laws in effect.

It is important that employers are aware of the trend, and should review or modify existing paid sick leave policies to ensure compliance with all applicable state and local laws.

SOCIAL MEDIA AND HIRING DECISIONS: A DANGEROUS MIX

In today’s society, social media is ubiquitous. Easy access to personal information online makes it extremely challenging for hiring managers and human resources staff to remain objective when making hiring decisions. However, that is precisely what the Federal Trade Commission expects. In a public workshop entitled, “Big Data: A Tool for Inclusion or Exclusion?” a panel addressed the implications of using social media to screen potential employees.

The FTC warned employers that even a casual review of a job applicant’s online profile exposes them to an abundance of information otherwise considered to have a protected status. This includes race, gender, religion, sexual orientation, and disabilities. Using social media as part of the screening process puts employers in a very vulnerable position, it cautioned, and the EEOC has in fact been active in recent months scrutinizing employers’ use of social media in their hiring practices.

Employers should carefully evaluate if and how they will use online information about a potential hire. They should implement a training program for employees involved in the hiring new staff and should consider keeping records of how they use social media as part of their hiring processes.

The Equal Employment Opportunity Commission (EEOC) recently issued new enforcement guidance relating to pregnancy and breast-feeding women in the workplace. While EEOC guidelines are not considered law, in this case, the very issuing of the guidance is considered controversial. It states that even though an employee is healthy and their pregnancy is normal, and that they are in no way disabled under the Americans with Disabilities Act (ADA), employers must still modify job requirements for pregnant or lactating employees as if they were covered under the ADA.

The timing of the EEOC guidance also raises questions, as the U.S. Supreme Court is set to rule on this very issue in the coming months. In the highly publicized case of Young v. United Parcel Service, Inc. the Fourth Circuit Court of Appeals held that the Pregnancy Discrimination Act (PDA) does not require the types of accommodations that the EEOC is now requesting. Given the Supreme Court’s decision to hear Young v. UPS, many industry experts believe the EEOC’s guidance is premature and could actually be overturned by the high court in the near future. We will continue to watch this story closely, and report to you as it develops.

EEOC ISSUES PREGNANCY

I NEED THE BABY AND MOTHER IMAGE

DISCRIMINATION ENFORCEMENT GUIDANCE

AB 1847 - Updating Mental HealthDisorders Language

The law changes terms used to describe mental health conditions (such as “insane,” “mentally defective,” and “abnormal”) to “persons with a mental health disorder” or “persons who lack legal capacity to make decisions.”

California’s 2014-2015 legislative session ended on August 31, 2014, with Governor Jerry Brown signing a number of important bills into law. Below is a brief summary of the most important legislation, relevant to the majority of California employers.

AB 1522 - Paid Sick Leave

Employees who work for at least 30 days are entitled to paid sick leave, accruing at a rate of at least one hour for every 30 hours worked. An employer can cap an employee’s use of paid sick days to 3 days (24 work hours) per year. An employee is permitted to use their accrued sick days beginning on the 90th day of employment.

AB 2053 - “Prevention of Abusive Conduct” training

Employers that currently provide mandatory sexual harassment training must add ‘prevention of abusive conduct’ to the training curriculum for managers and supervisors. Abusive conduct is defined as conduct with malice that a reasonable person would find hostile, offensive and unrelated to the employer’s legitimate business interests.

AB 1897 – Labor Contractor Requirements

Business entities with 25 or more workers that contract with staffing agencies or outside labor providers are now accountable for wage-and-

hour violations. If the labor contractor fails to pay its employees properly or to provide workers’ compensation coverage, the law

imposes legal responsibility on the client employer.

AB 1443 - Anti-harassment and discrimination protections against unpaid intern

Prohibits discriminating against unpaid interns and volunteers on the basis of any legally

protected classification (such as race, religion, sexual orientation, disability,

etc.) and to prohibit sexual harassment of them.

AB 1660 - FEHA Prohibits Discrimination based on Driver’s

License for Undocumented Workers

Last year, California passed AB 60 which authorized the Department of

Motor Vehicles to issue a special driver’s license to an undocumented person. This law makes it illegal to discriminate against an individual because they hold such a license, indicating the worker is undocumented. It further prohibits an employer to require an applicant or employee to present a driver’s license unless having one is a requirement of the job.

AB 1847 - Updating Mental HealthDisorders Language

The law changes terms used to describe mental health conditions (such as “insane,” “mentally defective,” and “abnormal”) to “persons with a mental health disorder” or “persons who lack legal capacity to make decisions.”

NEW 2015 CALIFORNIA EMPLOYMENT LAWS

IRS Increases Maximum Employee Contribution to Health Care FSAsThe Internal Revenue Service is raising the maximum annual employee contribution to a health care flexible spending account plan $2,550 in 2015. This is up $50 from the previous $2,500 limit which has been in effect since 2013.Employers that sponsor health care FSAs should update their employee communication materials and employer’s Section 125 Cafeteria Plan document accordingly. In the event that open enrollment has already begun, the employer may need to communicate directly with employees who have already made their elections.

AFFORDABLE CARE ACT: What Lies in Store for 2015 Following the Republican victories in the mid-term elections, the GOP is redoubling its efforts to investigate, de-fund, and repeal as much of the Affordable Care Act as possible. They have hired a team of lawyers and are pushing for Supreme Court review of key sections of the law. While their success remains to be seen, one thing is certain: Obamacare will remain at the top of the headlines throughout 2015. Below are a few key issues in the coming year:

• The Supreme Court has agreed to review the challenge that premium subsidies for individuals should be disallowed in the 36 states that did not establish their own Exchanges and are using the Federal Exchange (Marketplace). Should the Supreme Court find in favor of the plaintiffs, individuals in these states would lose their subsidies, which covers a significant portion of the premium costs. The decision would in effect kill Obamacare, without actually overturning it.

• In November, 2014 the IRS issued a ruling that employer-sponsored health plans must cover in-patient hospitalization services. If they do not, they are not ACA compliant. Many employers had adopted low-cost, minimum-value plans to meet their requirement of offering affordable coverage under the law. The IRS is permitting employers to keep these plans for one year if they already began implementing the plan by November 4, 2014.

• Penalties for not obtaining health insurance coverage increase sharply in 2015. In 2014, the “shared responsibility payment” for not having coverage was either 1% of annual household income or $95 per adult (the higher of the two). The maximum penalty for a family using the latter method was $285. In 2015, these penalties jump to 2% of annual income or $325 per adult, with the maximum family penalty increasing to $975.

Next year could bring significant changes to the Affordable Care Act. Whether or not your business is directly affected, the ramifications of these developments will be far reaching for businesses and individuals, so watch for changes and updates to the law.

TAX UPDATES FOR 2015FEDERALFICA (Social Security)Maximum Taxable Earnings $118,500 Employer/Employee 2015 Withholding Percent 6.2%Employer/Employee 2015 Maximum Withholding $7,347.00(up $93.00 from 2014 for ER and EE)

FICA (Medicare)Maximum Taxable Earnings No LimitEmployer/Employee 2014 Withholding Percentage 1.45%Employer/Employee 2014 Maximum Withholding No Limit (No change from 2014)

Additional Medicare Tax for Wages in Excess of $200,000 Rate 0.9% (No limit, no change from 2014)

SUPPLEMENTAL WAGESRate (flat rate withholding method) 25%Over $1 million 35% (No change from 2014)

WITHHOLDINGThe 2015 withholding tables have not been finalized, as Congress has not yet made their final decision on whether to adjust the tax rates. Any changes in the withholding tables will be communicated once they have been announced.

401(k) PLAN LIMITS:Elective Deferrals $18,000 (Up from $17,500 in 2014)

CALIFORNIA WORKERS’ COMPENSATION RATES

HIGHEST IN THE NATIONCalifornia has once again reaffirmed its position as one of the least business-friendly states in the nation after being ranked as the most expensive state for workers’ compensation costs.

The 2014 Oregon Workers’ Compensation Premium Rate Ranking Summary reports that, on average, California businesses spend $3.48 for every $100 of payroll to pay for workers’ compensation. That is almost double the average national rate of $1.85.

RISING RATES, DESPITE REFORMSOver the past 5 years, California’s average rates have risen approximately 40%. In 2012, the California legislature passed Senate Bill 863 which was touted as ushering in a new era of reduced claims litigation and improved efficiency. The projected savings from these new reforms were earmarked for increasing the benefits to injured workers. Unfortunately, despite the reforms, rates continued to rise as California moved up from 3rd most expensive state in 2012, to the most expensive 2 years later.

According to Jerry Azevedo, a spokesman for the California-based Workers’ Compensation Action Network, this increase can be blamed on a variety of factors, including:

An increasing rate of work-related injury claims

Increased workers’ compensation litigation

Increasing medical costs

Higher unemployment rates, which is often linked to an increase in claim frequency

Azevedo claims much of the collected premiums pay for attorneys who dispute medical treatments, while other money gets wasted in administrative overhead and brokers’ commissions.

401(k) Catch Up Contribution Deferrals $6,000 (Up from $5,500 in 2014)Maximum 401(k) contribution (employer and employee) $52,000 (No change from 2014)Maximum employee compensation towards contributions $260,000 (No change from 2014)

HSA PLAN DEFERRAL LIMITATIONSIndividual Maximum Contribution (Includes Employer Contribution) $3,350 (up $50 from 2014)Family Maximum Contribution (Includes Employer contribution) $6,650 (up $100 from 2014)

Catch-up Contributions (55+ years old) $1,000 (No change from 2014)

CALIFORNIA ONLY:SUPPLEMENTAL WAGE WITHOLDINGS Bonuses & Earnings from Stock Options 10.23% (No change from 2013)Other Supplemental Earnings 6.60% (No change from 2013)

DISABILITY INSURANCE (Employee Paid) Maximum 2014 Wages Subject to Withholding $101,636 (up $756 from 2013)Employee 2014 Withholding Percentage 1.0% (No change from 2013)Employee 2014 Maximum Deduction $1016.36 (up $7.56 from 2013)

About CPEhr: Founded in Los Angeles over 30 years ago, CPEhr is one of California’s oldest and most experienced Human Resources Outsourcing and Professional Employer Outsourcing (“PEO”) firms. It services over 75,000 employees nationwide, in a wide range of industries and workforces, ranging from two to thousands of employees. With a retention rate that exceeds 90%, its team members are committed to our clients’ success.

Unrivaled industry experience, combined with the flexibility afforded to a privately held corporation, allows CPEhr to deliver highly customized human resources support, while at the same time offering benefits typically associated with Fortune 500 companies.

FOR MORE INFORMATION ABOUT HR OUTSOURCING:For more information regarding Human Resources Outsourcing and how it may fit with your organization’s needs, contact CPEhr for a complimentary Business Consultation. In this no-obligation meeting, a senior consultant will analyze your current human resources practices and offer a customized solution to meet your needs.

Email: info@cpehr.com Phone: 877-842-4987 Website: www.cpehr.com Twitter: @cpehrFacebook: www.facebook.com/cpehr

AREAS OF SERVICE INCLUDE: • Human Resources Administration • ACA/Health Care Reform Compliance • Employment Compliance • Employee Benefits • Retirement Planning • Management Training • Safety and Risk Management • Workers’ Compensation Insurance • Payroll and Tax Administration • Recruiting

With health care, employment law and insurance guidelines changing so rapidly, employers must take a proactive stance to understand these changes and how they will impact their business. CPEhr is proud to offer a complimentary webinar series covering a wide range of Human Resources, Safety, Insurance and Health Care topics, delivered by experienced experts and trainers. We invite you to join our next webinar!

Details and registration can be found at www.cpehr. com/webinar-registration.

2015 TRAINING AND DEVELOPMENT WEBINAR SCHEDULE

With health care, employment law and insurance guidelines changing so rapidly, employers must be proactive so they understand how these changes will impact their businesses. CPEhr is proud to offer a complimentary webinar series covering a wide range of Human Resources, Safety, Insurance and Health Care topics, delivered by industry experts. We invite you to join our next webinar!

Details and registration can be found at:www.cpehr. com/webinar-registration.

2015 TRAINING AND

DEVELOPMENT

WEBINAR SCHEDULE

January 2015 Labor Law UpdatesFebruary Basics of Harassment TrainingMarch Legal InvestigationsApril Understanding the Generations May Exempt/ Non-Exempt or Independent Contractor? June Effective Interviews—How to find the right candidate July Workers’ Compensation Basics August The Benefits of Human Resources OutsourcingSeptember Effective Performance AppraisalsOctober Legal Termination November Managing Your Team Through Times of Change