09-08-2010_Legislature_Adjourns

     Legislature "Beats Feet" With No Budget In Sigh 

BY: Phil Vermeulen, Legislative Advocate 

Also In This Update • Governor And Legislature Begins to Look At Changing the Tax Code • Coalition Urges State Treasurer to Release More Bond Funds To Build

Schools • New Employer Wall Posting Requirements • CARB Revises Emissions Data • CARB Will Hold Training Classes on Portable Equipment Registration

Program

Thankfully, the Legislature officially adjourned their 2009-2010 two-year Legislative Session at Midnight this past Tuesday. On the last day, both Houses performed a budget "drill" (where both the Dems and the Reeps put their respective budgets up for floor votes), only to have both versions go down "in flames" as expected. This means that the Big 5 will continue to meet (so to speak since they've only met once in the past 75 days or so) to try and "hammer" something out. As I've mentioned before, don't be surprised if they agree on an interim solution to keep the state afloat that will allow them to get past either the election or "Arnie's" term. Stay tuned for updates. Besides the bills that I've previously reported have gone to the governor, there were a couple of others of significance that passed as well: AB 569 (Emmerson) - Current law states that employees may not work more than 5 hours in a workday without being provided a 30 minute meal period. Various interpretations of this section by enforcement officials have led to confusion and litigation. In fact, meal period disputes are currently 40% of all California class-action lawsuits and approximately half of all employment-related lawsuits filed in California. While this measure only provides a solution for signatory contractors, it is a step in the right direction. We are hopeful that we can broaden this to incorporate all contractors next session. There is a question whether the governor will sign this measure since it only pertains to contractors signatory to a collective bargaining agreement. SB 392 (Flores) - Will allow licensed contractors to become Limited Liability Companies (LLCs), but a contractor will be required to, among other things, post a $100,000 wage and fringe benefit surety bond along with a $1 million per occurrence general liability policy if the license has 5 or fewer people listed on it. For firms with more than 5 persons listed, each additional person shall require an additional $100,000 of coverage up to $5 million maximum. While this bill will truly only affect the larger contractors at first, we will be working to broaden its scope in the future by reducing these aforementioned amounts. This is one of the "crawl before you walk" type of bills that will prove the viability of this change in the law. Again, there's lots more to report about this year's Legislative Session. Watch for my "Year-End Annual Legislative Report" which will be sent out in October (after the governor acts on all of the bills sent to him).

Governor And Legislature Begins to Look At Changing the Tax Code I attended a joint (Senate and Assembly) Revenue and Taxation Committee hearing yesterday which was called to review the governor's tax reform proposal. The governor's idea rests on the same concept as a plan issued last year by a bipartisan, 14-member tax commission. The plan called for a different tax mechanism – a 4 percent "business net-receipts tax". The proposal would have captured more taxes from service industries. Basically, since California has become a service economy, this proposal would tax all services. Since this proposal would have a major impact on construction (because it would affect existing fixed priced contracts among other things), I have already joined a coalition in opposition to this proposal. Following is a draft letter we plan to send out with all our respective clients' letterheads on it: September 1, 2010 The Honorable Arnold Schwarzenegger Governor State of California State Capitol Sacramento, CA 95814 RE: SALES TAX EXPANSION Dear Governor Schwarzenegger: On behalf of the undersigned companies and organizations we must respectfully oppose any expansion of the sales tax in California.

THERE SHOULD BE NO SALES TAX ON SERVICES The only reason the state has considered this proposal in the past is to generate revenue, and even a proportionate rate reduction would adversely affect businesses and consumers by placing an unfair tax burden on both.

1. A sales tax is regressive—the burden will bear disproportionately on lower-income households. As is generally true with the sales tax, services may make up a greater percentage of a low-income individual’s wage and therefore be a greater burden than a high-income earner.

2. Businesses and service employees would leave California. A sales tax on services ignores the fact that many services can be performed out of state. For example, a software company can do programming in Colorado; and buildings in Nevada need cleaning, forcing both the company and the employee out of the state.

3. The increased cost to business will affect the bottom line of business in California. Businesses with thin margins will be impacted much more than a small savings to consumers.

4. Small businesses would be at a competitive disadvantage compared with large businesses. A small business is often forced to use outside providers, such as accountants or computer programmers, for many services and would have to pay taxes on these services; a large business can perform these activities in-house and avoid the tax.

5. The incentives and rewards of operating in the underground economy will grow more appealing to unscrupulous service businesses seeking to avoid taxation and gain an advantage over law-abiding competitors.

6. States that have tried significant expansion of a sales tax on services—Florida and Massachusetts—have regretted the proposal and repealed the tax.

ADMINISTRATIVE COSTS In 1995, AB 194 (Murray) proposed increasing the tax on certain services. At that time, the BOE estimated start-up costs of $600,000 and continuing costs of $9 million annually. The costs

would have been associated with identifying and registering approximately 42,000 new business entities that would have been required to remit sales taxes on gross receipts. The BOE also estimated additional computer automation costs of $436,000. The administration of a tax on services could be complicated for the following reasons:

1. In order for businesses to comply with a new tax, the BOE has to be able to audit the tax to ensure accurate remittance and compliance, if the BOE does not have an adequate auditing system, there would be little incentive for businesses to voluntarily comply.

2. In order to administer the tax, the definitions of services and everything included in the service would have to be well defined and specific. Absent clear definitions, administration would be costly and difficult.

3. Identifying and registering new businesses would be a significant administrative burden. There would be tens of thousands of businesses in California that would have to comply with the new tax; not only would there be costs associated with greater volume of tax returns but also significant costs associated with notifying businesses about the new requirements.

4. The administrative costs (collection and audit) for the tax would proportionately increase depending on how broad the base of the sales tax is.

Thank you for considering our views. ############################################################ I will keep everyone posted on this matter. Coalition Urges State Treasurer to Release More Bond Funds To Build Schools In my ever-continuing effort to help "kick-start' the construction industry, I have joined a coalition that includes all of the parties who will benefit from additional funding for building new schools. Attached with this update is the letter that I signed, along with our association's logo. Again, a billion here and a billion there starts to add up! I'll keep you posted on this one, too. Employer Posting Requirements Running out of wall space to hang all of the government-required posters (which no one ever reads, anyway!)? Well, here's a new one that you will be required to hang! This article is from the California Chamber who provides the required posters for a nominal cost. Note they're other new requirements as well.

California’s Division of Workers' Compensation (DWC) has finalized regulations that require all employers within the state to post a new ‘Notice to Employees – Injuries Caused by Work.’ You must post this notice, in a conspicuous location frequented by employees, by October 8, 2010. Failure to post the notice by the October deadline can result in fines of up to $7,000 in civil penalties.

California employers must also distribute a new ‘Your Rights to Workers’ Compensation Benefits’ pamphlet.

All California employers must:

• Post the new version of the ‘Notice to Employees – Injuries Caused by Work’ (dated 6/10/10) by October 8, 2010.

• Distribute a new ‘Your Rights to Workers’ Compensation Benefits’ pamphlet to all new employees who start to work on or after October 8, 2010, at the time of hire or before the end of the first pay period.

Employers within an existing Medical Provider Network (MPN) must:

• Create a complete MPN Notice and post it next to the ‘Notice to Employees – Injuries Caused by Work’ poster by October 8, 2010. The complete MPN Notice is described in our Workers’ Compensation Final Regulation Q&A document.

• Give the same complete MPN Notice you've created to any employee injured at work on or after October 8, 2010.

Employers who are implementing, changing or terminating an MPN must:

• Post a complete MPN Notice next to the ‘Notice to Employees – Injuries Caused by Work’ poster by October 8, 2010. The complete MPN Notice is described in our Workers’ Compensation Final Regulation Q&A document.

• Give the complete MPN Notice to any employee injured at work on or after October 8, 2010.

• Give all employees notice that you are implementing, terminating, or changing the MPN.

We also encourage you to purchase Poster Protect for 2011, as there may be updates to the 2011 California Employment Notices Poster.

If you need to purchase an updated 2010 California Employment Notices Poster, we have several options for you to stay in compliance:

• Purchase the 2011 California Employment Notices Poster (Non-Laminated) with Poster Protect for $36.99 and receive the 2010 revised California Employment Notices Poster for $15.00. Total price of $51.99.

• Purchase the 2011 California Employment Notices Poster (Laminated) with Poster Protect for $57.99 and get 2010 revised poster for $20.00. Total price of $77.99

• Purchase the 2010 revised California Employment Notices Poster (Non-Laminated) for regular price of $23.00 and the 2010 revised California Employment Notices Poster (Laminated) for the price of $39.00. We recommend purchasing Poster Protect for 2011, as there may be updates to the 2011 California Employment Notices Poster.

• Purchase the updated Workers’ Compensation Pamphlets for $15.00 for a pack of 20.

What is Poster Protect? CalBizCentral’s POSTER PROTECT will provide you with a new poster at no additional charge if any mandatory changes occur to state or federal employment law posting requirements during the calendar year of 2011. Worry-free compliance—Don’t worry about researching changes or trying to identify which changes are mandatory. We do the work for you. Purchase POSTER PROTECT and we will automatically send you the new poster at no additional charge.

If you are currently a Standing Order Customer with us, please call us at (800) 331-8877 to make changes or to update your current order with us.

CalChamber is here to help you stay in compliance, please feel free to call us with any questions you have in regards to this email at (800) 331-8877 or visit us online at www.calbizcentral.com. Please reference your CID number: 5805 when calling us.

CARB Revises Emissions Data This week the California Air Resources Board (CARB) abandoned the original estimates of off-road diesel emissions that it used to establish goals for emissions reduction from off-road construction equipment. In doing so CARB essentially conceded that the “off-road rule” is not needed to meet these ambitious goals. According to new estimates that the agency's staff developed over the summer, off road fleets of diesel equipment will be far under the state’s emission goals for many years to come. CARB’s action was taken in direct response to our questioning of the data used in establishing the goals. CARB Will Hold Training Classes on Portable Equipment Registration Program CARB will be conducting training class #502 for the Portable Equipment Registration Program and the Portable Engine ATCM. In addition to presenting the current requirements of both regulations, the class will contain some discussion of the recent amendments to both regulations. The class will be taught on September 29th in Sacramento. To sign up for the class, please go to: http://www.arb.ca.gov/training/courses.php?course=502