SB 93 Impacts Janitorial Companies’ Hiring Practices

Author, Jeremy Hoolihan, Account Executive, Rancho Mesa Insurance Services, Inc.

As businesses continue moving towards fully reopening, certain California employers will be faced with reemployment or recall requirements, due to Senate Bill 93 (SB 93). SB 93 was signed into law by Governor Gavin Newsom on April 16, 2021. The law requires that covered employers offer their employees who were laid-off due to the COVID-19 pandemic, available employment based on a preference system. 

While several industries are impacted by this new legislation, employers that provide “building services” such as janitorial, building maintenance, or security services to office, retail, or other commercial buildings also fall under the requirements of the new law.

As an expert insuring janitorial companies through our exclusive MaintenanceOne™ program, this impacts many of our clients. To understand some of the additional components of the new law, we have summarized some key points below:

Qualifying Employees

Employees that qualify for SB 93 protection must have:

• Been employed by a covered employer for “6 months or more in the 12 months preceding January 1, 2020.

• Been “separated from active service…due to a reason related to the COVID-19 pandemic, including a public health directive, government shutdown order, lack of business, a reduction in force, or other economic, non-disciplinary reason related to the COVID-19 pandemic.”

• Worked two hours or more per week for the employer.

Requirements of the Employer

• Covered employers must offer laid-off employees all job positions that become available for which the employee qualifies. Laid-off employees will be deemed qualified if the employee held the same position at the time of the lay-off.

• The laid-off employee must be given five business days to respond to the offer.

• In the event that more than one employee would be eligible for a position, the employer must offer the position to the employee with the longest tenure based on the date of hire.

• An employer that declines to recall a laid-off employee on the grounds of lack of qualifications must provide the laid-off employee written notice within 30 days.

Record-Keeping

Covered employers must maintain the following records for at least three years starting from the date of layoff:

• Employee’s full legal name

• Employee’s job classification at time of layoff

• Employee’s date of hire

• Employee’s last known home address

• Employee’s last known email

• Employee’s last known telephone number

Records must also include any layoff notices and “all records of communications between the employer and the employee.”

Enforcement and Penalties

SB 93 compliance and enforcement is handled by the California Division of Labor Standards Enforcement (DLSE). The DLSE may order reinstatement, front and back pay, and benefits, as well as impose substantial penalties and liquidated damages. SB 93 takes effect immediately and expires on December 31, 2024.

The law also has a collective bargaining agreement waiver provision – any such waiver must be explicitly set forth in that agreement in clear and unambiguous terms.

No Retaliation

SB 93 prohibits employers from retaliating or taking adverse action against employees seeking to enforce their rights.

What’s Next?

Covered employers should take stock of their current situations and evaluate their options for compliance.  Employers should also take extreme caution when making their employment decisions. It is an especially difficult time for both employers and employees. Employers are expected to follow the law closely and employees are desperate to find employment. If not careful, this could lead to disagreements and potential employment related lawsuits.

If you are a janitorial business trying to navigate through these turbulent times, consider our  MaintenanceOne™ program which provides a full service Risk Management Program that can not only assist your business with its insurance needs such as Employment Practices Liability Insurance, but also assist with HR and compliance that can guide you through this process. 

Please contact me at (619) 937-0714 or jhoolihan@ranchomesa.com for more information on MaintenanceOne™.

3 Ways for Nonprofits to Opt Out of Unemployment Tax

Author, Sam Brown, Vice President, Human Services Group, Rancho Mesa Insurance Services, Inc.

Nonprofit leaders who want to reduce overhead and tax burdens should consider revisiting their organizations’ unemployment tax status. More to the point, thanks to the Federal Unemployment Tax Act of 1972, nonprofits can eliminate the unemployment insurance tax and outsource the headache of claims administration. Let’s investigate further.

Traditionally, the state charges a nonprofit employer payroll tax to fund the state unemployment insurance program. Each nonprofit’s tax rate adjusts each year depending on employee turnover and unemployment claims. According to several sources, nonprofits pay an average of $2.00 in taxes for every $1.00 in paid claims. So how do we reduce this overage?

Now for the good news; nonprofits are not required to pay the state unemployment tax. Provision 3309a of the Federal Unemployment Tax Act allows 501(c)(3)s to choose whether to pay into the state program at the prescribed tax rate, or to pay into the program an amount equal to the actual unemployment benefits paid out by the state program. In other words, a nonprofit employer may “opt out” and reimburse the state.

Below are three “opt out” and administrative solutions a nonprofit should consider depending on its desired level of risk.

1. First Dollar Insurance: A private insurance company provides a fixed rate based on the nonprofit’s individual claims history and expected future claims. This option provides budgetary certainty with a low-risk product. If unemployment claims exceed expectations, there is no additional cost to the employer.

2. Customized Stop-Loss Insurance: For nonprofit leaders who want to accept more risk and realize higher savings, the employer pays an agreed upon self-insured retention, after which point the insurance company pays all benefits.

3. Nonprofit Unemployment Trust: For nonprofit organizations with high employee retention or low unemployment claims frequency, a trust can offer a high return in exchange for higher risk. In most cases, the trust protects the employer against unexpected, catastrophic charges. The nonprofit employer has a high retention that must be met before the protection is triggered.

Each solution presented above provides services to further reduce risk and unemployment expenses. These services include claims management, hearing representation, unemployment cost management training, and transparent billing and accounting.

Whether the nonprofit pays unemployment taxes or reimburses the state, there are advantages and disadvantages. Nonprofit leaders who understand these details and the nuances of each solution will have the confidence to move forward in the direction that best suits the organization.