Small business employment involves knowing the hiring laws in your state to protect you or your business from getting sued.
1 There are many buildings and other structures in Florida, and none of them built themselves. Each building required construction, and given the different aspects of any building project, they often require general contractors and subcontractors to complete various aspects of the project. Everyone involved must do their job to complete the project properly. Once their jobs are completed, they need to receive the compensation earned. Signed contracts help ensure, that the work completed, by contractors and subcontractors allow them to be paid for their work. For example, signed contracts are formed between the owner and the general contractor and between general contractors and subcontractors. Besides, contracts have been broken and when that occurs, there can be disputes that transpire and thus construction litigation. The most common disputes that happen are disputes over the scope of work that is to be completed between owners and general contractors. This usually occurs when the two sides have different interpretations of the scope of work. Another common dispute that arises can occur between general contractors and subcontractors over the scope of work. Additionally, there is a dispute when a new subcontractor is substituted in for another one or over construction defects during the construction of the building. 2 Construction projects in Florida have been known to involve different people and companies. There are many different aspects involved in these projects, and they too can last over a long period of time. As a result, disputes can occur during these projects. These disputes may involve large sums of money and can have major impacts on those involved. It is important to understand their rights and obligations in these situations and more importantly, consult with a professional experienced in construction law. Due to the many potential disputes that may arise along the way, consulting your construction lawyer along the way is highly advised. Contact the attorneys at Jurado & Farshchian, P.L. to receive counsel in matters pertaining to construction law. To schedule an initial consultation with our Construction Experts, you may call us at (305) 921-0440 or send us an email to [email protected]
Understand FLSA Exemptions The FLSA details precisely which types of employees the legislation applies to, and which types of employees are exempt from aspects of the law’s requirements such as overtime pay. There are two main tests that determine whether an employee is exempt or non-exempt: the salary test and the duties test. Some of the exemptions under the duties test include executives, outside salespeople, highly compensated employees, and administrative employees. Employees are exempt under the salary test if they earn at least $455 per week. Misclassifying employees as exempt when they should be non-exempt is one of the biggest causes of FLSA violations, so be sure you fully understand how the exemptions work. Self Audit Consistently perform self audits of your company’s FLSA compliance. Allow a knowledgeable business attorney to analyze your company’s policies and identify potential FLSA risk factors you should address. If you perform audits yourself, you will prepared if you are ever audited by the Department of Labor, and be better equipped to handle any lawsuits that arise. Beware of digital complications In the Digital Age, numerous workers are constantly connected to their workplace through their phones and other portable electronics. If you have non-exempt employees who are checking and responding to emails in a manner which benefits your company—even if you did not ask them to—the time spent responding to emails could be compensable and count towards overtime. Be aware of your obligations with regard to digitally connected employees. Require employees to take lunch away from workplace You are required to pay for the hours that an employee works. If you allow for an unpaid lunch break, and the employee remains at their workplace, they may feel obligated to work during their lunch break. You will be required to compensate them for that time. If you want employee lunch breaks to remain unpaid, require them to take their lunch breaks away from their work space. Educate managers on FLSA-related policies Your managers are the ones who exercise the most control over keeping employees in compliance with company policies that are meant to protect you from FLSA violations. Ensure that your managers are properly trained and aware of your rules and regulations when it comes to FLSA-related policies so that they can adequately enforce them. Develop well-defined complaint policies and procedures If you develop clear and effective employee complaint policies, you can give employees an outlet to remedy potential issues before the problem escalates into a lawsuit. For example, if an employee believes they were not paid the overtime they deserved, they could follow your guidelines for issuing a complaint, giving you the opportunity to address and rectify the issue rather than forcing the employee to seek legal remedies.
Until April 2018, the 11-factor balancing test in S. G. Borello & Sons, Inc. v. Department of Industrial Relations (California Supreme Court) had long applied to classifying workers as employees or independent contractors. That court then dramatically changed the rules in Dynamex Operations West, Inc. v. Superior Court. See, Independent Contractor Status in California Now Falls Under Radically Different Rules (June 2018). Now, a hiring company could only treat a worker as independent if the individual met three criteria: (A) the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact; (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 for the hiring entity. Confusion followed since Dynamex’s “ABC” definition only applied to the reach of state minimum wage, overtime, meal and rest break and other related rules, with the 11 Borello factors remaining for contractor/employee distinction on all other issues, for example workers’ compensation protections and unemployment benefits. Assembly Bill (AB) 5 -- most of which is scheduled to go into effect January 1, 2020 -- is state government’s attempt to more uniformly apply the Dynamex “ABC” test, including to work comp and unemployment. Yet, true to the legislative process, the new law is full of available exemptions for certain occupations and industries: • certain medical professionals, licensed lawyers, accountants, enrolled agents, architects, engineers, and private investigators; • insurance licensees, securities broker-dealers and investment advisers; • direct salespeople, marketers, human resource administrators, travel agents, payment processing agents, and grant writers, real estate licensees, and repossession agencies; • graphic designers, fine artists, certain photographers or photojournalists, and certain freelance writers, editors, or newspaper cartoonists; • licensed cosmetologists, barbers, estheticians, and manicurists; and • licensed construction contractors that have licensed subcontractors. Another possible exemption is a business hiring another business to provide work directly to the hiring business and not to its customers. In suitable circumstances, this may apply to the software industry for example. Those covered by these exemptions still must meet the Borello factors to claim legitimate independent contractor status. While many commentators are pointing to the potentially devastating effect of AB 5 on the so-called “gig economy,” the law will also seriously affect many other industries, trucking prominent among them. Already at work helping companies with implementation, we will be supplementing this overview with additional articles on specific industries or features of the new law. See also: • Making Dynamex Retroactive (May, 2019) • Independent Contractor or Employee? (April, 2019) • Independent Contractor Status? It Depends (November, 2018) For further information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin. Helena Kobrin October 4, 2019
Amending the operating agreement, is practically a prerequisite. Since, LLCs are designed to have flexible management with few corporate formalities, while S Corps impose strict ownership requirements, along with many formalities; a carefully drafted amendment of the LLC's operating agreement, would need to be made, in order to bridge the gap, of these two regulatory frameworks. A single member LLC can transition to S Corp tax election. Single member LLCs are a disregarded entity, for federal tax purposes. They are not considered partnerships, like multi member LLCs, in terms of federal taxation. This is important, because partnerships do NOT qualify for S Corp tax treatment. This mean single member LLCs can elect corporate tax treatment, and then make the leap to S Corp tax election. Statutory conversion. Depending on the jurisdiction, it may be possible for an LLC to convert into a Corporation. Doing this conversion, opens the possibility for multi member LLCs to seek S Corp tax election. Statutory merger. If a statutory merger is not available in your jurisdiction, or just too costly for state and local tax purposes, then there may be another alternative. This involves creating a separate entity, a Corporation, and then have the LLC merge into the Corporation. Similar to a conversion, this may make multi member LLCs eligible for S Corp tax treatment. An additional option, which is too complex to discuss on this part, but is worth mentioning, is a non-statutory conversion
1. Paying taxes at the exit door. S Corps may not be particularly hard to structure, but could create a situation of being impossible to leave an S Corp tax election, due to taxes that may be due to exit. A common example, are C Corps who elected S Corp status, and have significantly appreciated assets, which could trigger taxes upon sale. 2. Paying taxes to enter. In certain situations, mostly involving poor planning, electing S Corp tax status, could create a tax liability for its S Corp shareholders. There can be enormous tax differences, between a stock sale vs. entity sale vs. a merger vs. asset sale. 3. Paying taxes without getting cash. A common departure from the deeply rooted tax principle of ability to pay, being a key factor of determining the tax payment timing rules, lies in the areas of S Corp, LLC and partnership taxation.
BY DEFAULT, HOURLY EMPLOYEES WITH MULTIPLE HOURLY RATES EARN OVERTIME USING “WEIGHTED AVERAGE”. In California, the law does not necessarily prohibit an employee from working more than eight consecutive hours in a day, or more than forty hours in a workweek. However, hours worked more than either of these thresholds trigger an employee’s entitlement to overtime pay. The standard overtime formula is: [(Regular Rate of Pay x Overtime Rate of 1.5x or 2x) x Overtime Hours] In the construction industry, different hourly rates of pay for different tasks are common. So, for purposes of determining an employee’s Regular Rate of Pay when two or more hourly rates are applicable during a workweek, a method called “Weighted Average” is used to reconcile the different hourly rates into a single rate. It is important to note that Weighted Average calculations must be determined for each workweek separately. To do this, the formula below is used: Total hours worked for the workweek / Total compensation for the workweek = Weighted Average For example, consider an employee who has an hourly rate of $15.00 for administrative tasks and an hourly rate of $20.00 for training new office staff. This employee works a total of 45 hours in a given workweek, which is comprised of thirty-five hours at $15.00 per hour and ten hours at $20.00 per hour, for a total of $725.00. This employee’s Weighted Average (i.e. Regular Rate of Pay for the workweek) is: [($15.00 x 35 hours) + ($20.00 x 10 hours)] / 45 hours = $16.11 Accordingly, this employee’s Regular Rate of Pay for this workweek is $16.11 using the Weighted Average method. Now, assuming that this employee’s overtime did not trigger double-time, the Regular Rate of Pay of $16.11 would be multiplied by the standard overtime multiplier of 1.5x as follows: ($16.11 x 1.5) x 5 hours overtime = $120.83 Thus, this employee’s total overtime payment for the week is $120.83. WAGE ORDER NO. 16 DOES NOT PERMIT EMPLOYERS TO ABANDON “WEIGHTED AVERAGE”. Wage Order 16 applies to many on-site occupations in the construction industry. The following provision has been incorrectly interpreted to exempt construction employees—and, by extension, their employers or representatives—from using Weighted Average for overtime calculations: Nothing in this section requires an employer to combine more than one rate of overtime compensation in order to calculate the amount to be paid to an employee for any hour of overtime work. However, this interpretation cannot be correct. The plain language above states that an employer does not have to combine “more than one rate of overtime compensation” – the phrase “rate of overtime compensation” is commonly associated with the multipliers of 1.5 or 2 from the overtime formula, which is in a separate portion of the formula than Weighted Average. Thus, Wage Order 16 does not exempt employers from using Weighted Average.