Table of Contents

1. Minimum Wage Increase
2. Deduction Statements Required
3. Independent Contractors Reporting
4. How to Prevent a Workers' Compensation Claim

Minimum Wage Increase

    The California Industrial Welfare Commission (IWC) has passed a proposal to increase California's minimum wage from the current level of $6.25 an hour to $6.75 an hour beginning on January 1, 2002.

    The federal minimum wage is currently $5.15 an hour, though Congress is considering raising the minimum wage to $6.15 an hour.  The increase would affect about 10 million low-wage workers nationwide.

    Although many low-wage workers will appreciate the increase, the effects of such an increase are wide-spread throughout the economy. An increase in the wage floor always results in higher wages for all workers, and higher employer contributions to such programs as workers' compensation insurance and overtime.  Prices for products and services will increase for both consumers and businesses as a result of the increases in labor costs.

    Employers must remember to post the 2002 labor law posters reflecting the wage increase by January 1, 2002.  Contact your United Employer Resources, Inc. representative immediately if you do not have the new 2002 poster set.

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Deduction Statements Required

    The itemized deductions of an employee’s pay must be included with the employee’s paycheck each time wages are paid.  The deduction statement is often referred to as the “Check Stub.”  Section 226 of the California Labor Code lists specific required information on the statements, they are:

    Failures to meet the requirements are subject to penalties.  A maximum penalty of $4,000.00 is issued to the employer of an employee that was harmed from not being provided with the proper deduction statement.

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Independent Contractors Reporting

    Beginning January 1, 2001, all businesses that hire independent contractors (1099-MISC) will be required to file reports with the state Employment Development Department (EDD).  This new independent contractor reporting program is designed to locate parents who are delinquent in their child support obligations. 

    Any businesses that is required to file a Federal Form 1099-MISC for services performed by an independent contractor must comply with the new state independent contractor reporting requirements as well.  No reporting is required when hiring another business, such as a corporation, general partnership or limited liability company. 

    Specific information must be reported to EDD within 20 days of entering into a contract for $600 or more in any calendar year with an independent contractor, or within 20 days of making payments totaling $600 in any calendar year to an independent contractor, whichever is earlier.  Reports will be made on Form DE-542, and must include the start and the expiration dates of the contract (unless the contract is ongoing); the hiring business's federal employer identification number, California employer account number and Social Security account number (if applicable); and the business name, address, and telephone number.  Also reported will be the independent contractor's first name, middle initial, last name and Social Security number.

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How to prevent a Workers' Compensation claim:

California law requires employers to provide a safe and healthy work environment.  Here are some tips you can implement in addition to United Employer Resources, Inc. Safety and Injury Prevention program. 

Potential worksite hazards include:

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