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Boutin Jones Tax Law Group has Launched the California Tax Notebook

In response to the many changes in tax law enacted in 2020 and the changes we see on the horizon for 2021, the Boutin Jones Tax Law Group has launched the California Tax Notebook. Our newest Boutin Jones blog, the California Tax Notebook, contains timely information such as how the CARES Act impacts tax law, how two recent decisions ruled against taxpayers and in favor of the California Franchise Tax Board, an update on 1031 Exchanges, monthly tax law tips–and more. Visit the site at californiataxnotebook.com and subscribe to receive an email when new articles are published.

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New COVID-19 Workplace Exposure Notice and Reporting Requirements Become Effective January 1, 2021

In response to the COVID-19 pandemic and the need to maintain a safe workplace, AB 685 requires employers to provide specific notices to employees and others related to COVID-19 exposures in the workplace. It also provides the California Division of Occupational Safety and Health (“Cal/OSHA”) with expanded authority to enforce such requirements and ensure safe workplace operations. AB 685 is effective January 1, 2021.

New Employer Notice and Reporting Requirements for COVID-19 Exposures in the Workplace

A.  Notice to Employees and Exclusive Representatives of Potential COVID-19 Exposures at Same Worksite

AB 685 requires employers to provide notices to employees at a worksite and their exclusive representatives (for represented employees) related to potential COVID-19 exposures in the workplace within one business day of being informed of a potential exposure by, a (1) “qualifying individual” at (2) the same “worksite,” within (3) the “infectious period”. These three terms help determine if such notices are required and are defined as follows:

  • A “qualifying individual” means a person who can establish any of the following requirements:
    • A laboratory-confirmed case of COVID-19;
    • A positive COVID-19 diagnosis from a licensed health care provider;
    • A COVID-19 related isolation order issued by a public health official; or
    • Death due to COVID-19, as determined by the County public health department.
  • “Worksite” is defined to include the building, store, facility, agricultural field, or other location where a qualified individual worked during the infectious period. However, it does not apply to buildings, floors, or other locations of the employer that the qualified individual did not enter.
  • The “infectious period” for an individual who develops symptoms for COVID-19 begins two days before they first develop symptoms and ends when the following criteria are met:
    • 10 days have passed since symptoms first appeared, AND
    • At least 24 hours have passed with no fever (without use of fever-reducing medications), AND
    • Other symptoms have improved.
  • For an individual who tests positive for COVID19 but never develops symptoms, the “infectious period” begins two days before the specimen for their first positive COVID-19 test was collected and ends 10 days after the specimen for their first positive COVID-19 test was collected.

Once the potential COVID-19 exposure is identified under the guidelines above, an employer is obligated to send out the following notices:

  1. Notice to Employees at Same Worksite
    The employer must provide a written notice to all employees, and to the employers of subcontracted employees, who were present at the same worksite within the infectious period stating that they may have been exposed to COVID-19. The notice must include information regarding any COVID-19-related benefits or leave rights under federal, state, and local laws, or pursuant to employer policy, as well as the employee’s protections against retaliation and discrimination. Finally, the notice must include the employer’s plans for implementing and completing a disinfection and safety plan pursuant to guidelines issued by the federal Centers for Disease Control. The notice must be sent in a manner the employer normally uses to communicate employment-related information. This can include personal service, email, or text message so long as it can be reasonably anticipated that employees will receive the notice within the one business day requirement. The notice must be in both English and the language understood by the majority of employees.
  2. Notice to Exclusive Representative of Represented Employees
    If the affected employees who are required to receive this COVID-19 exposure notice include represented employees, the employer must send the same notice to the exclusive representative of the affected bargaining unit. Failure to comply with these requirements may subject the employer to a civil penalty. AB 685 also prohibits employers from requiring employees to disclose medical information except as required by law, and prohibits employers from retaliating against an employee for disclosing a qualifying case of COVID-19. Employers are also required to maintain records of these potential exposure notices for at least three years.

B.  Notice to Local Public Health Agency of “Outbreak” at Worksite

Where an employer has three or more laboratory-confirmed cases of COVID-19 within a two-week period among employees who live in different households this constitutes a COVID-19 “outbreak”. Once an employer is on notice of an “outbreak”, it must notify the applicable local public health agency within 48 hours of the names, number, occupation, and worksite of any “qualifying individuals” related to the “outbreak”.

AB 685 also requires the California Department of Public Health (CDPH) to make workplace statistics received from local health departments under this provision – other than personally identifiable employee information – available on its website, such that members of the public can track the number of cases and outbreaks by industry.

C.  Exceptions to Notice and Reporting Requirements

These new COVID-19 notice and reporting requirements apply to all private and public employees, with two exceptions:

  • Health facilities, as defined in Section 1250 of the Health and Safety Code, are exempt from reporting an “outbreak” within 48 hours as described above.
  • The notice requirements do not apply to exposures by employees whose regular duties include COVID-19 testing or screening or who provide patient care to individuals who are known or suspected to have COVID-19, unless the “qualifying individual” is also an employee at the same worksite.

Expanded Cal/OSHA Authority to Address COVID-19 Issues

A.  Cal/OSHA Will Be Authorized to Shut Down A Workplace, Operation, or Process that Creates an Imminent Hazard Due To COVID-19 Exposure Risk

AB 685 expands and clarifies Cal/OSHA’s authority to prohibit entry to a workplace or to the performance of an operation/process within a workplace if Cal/OSHA finds that it exposes employees to a risk of COVID-19 infection and thereby creates an imminent hazard to employees. If Cal/OSHA uses its authority to apply such a workplace restriction, it must then provide the employer with notice of the action and post that notice in a conspicuous place at the worksite. In addition, Cal/OSHA may not impose restrictions that would materially interrupt “critical government functions” essential to ensuring public health and safety functions, or the delivery of electrical power or water.

This expanded authority sunsets on January 1, 2023, and will be repealed automatically on that date unless extended further by the Legislature.

B.  Amends Cal/OSHA Procedures for Serious Violation Citations Relating to COVID-19

Through January 1, 2023, Cal/OSHA, Cal/OSHA is not obligated to provide an alleged violation to an employer in advance for COVID-19 serious violation citations issued and can instead issue the citation immediately. The employer would still be able to contest the citation through the existing Cal/OSHA appeal procedures.

Impact of AB 685 on Employers

Employers should review and revise their existing procedures related to notification of COVID-19 exposures in the workplace in order to ensure they are ready to comply with the new notice and reporting requirements imposed by AB 685 once it becomes effective.

Boutin Jones attorneys are available to assist in employers to ensure compliance with AB 685, to provide legal advice on the impacts of this new law, and to answer any other questions you may have regarding this Employment Law Alert. Please contact an attorney in our Employment Law Group by phone at (916) 321-4444 or via email:

Gage C. Dungy                 gdungy@boutinjones.com

Julia L. Jenness                 jjenness@boutinjones.com

Kimberly A. Lucia             klucia@boutinjones.com

James D. McNairy            jmcnairy@boutinjones.com

Bruce M. Timm                btimm@boutinjones.com

Errol C. Dauis                   edauis@boutinjones.com

Andrew M. Ducart          aducart@boutinjones.com

Kendall C. Fisher-Wu     kfisher-wu@boutinjones.com

Lissa Oshei                      loshei@boutinjones.com

Businesswoman in medical face protection mask

Businesswoman in medical face protection mask

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California Small Business Hiring Tax Credit Application Period Underway

By:  Matthew D. Carlson

On September 9, 2020, Senate Bill 1447 was signed into law and created a new tax credit aimed at providing relief to struggling small businesses. SB 1447 provides certain small businesses with a $1,000 tax credit for each net increase to full-time employees. Applications are allocated on a first-come, first-served basis, and are being accepted from December 1, 2020, through January 15, 2021. Applications must be submitted electronically on the California Tax and Fee Administration (“CDTFA”) website (link here).

Eligible Small Business

A small business must satisfy several criteria to qualify for the tax credit. First, the business must meet the definition of a “qualified small business employer,” which means that the business must:

  1. Have 100 or fewer employees as of December 31, 2019; and
  2. Experience a 50% decrease in gross receipts during the three-month period beginning on April 1, 2020, through June 30, 2020, compared to the same period in 2019. (Gross receipts are generally all income less returns and allowances.)

This definition limits tax credits to relatively small businesses that experience significant revenue losses in early 2020 immediately following the Covid-19 outbreak.

Increase to Full-Time Equivalent Employees

A qualified small business must also have a “net increase” in qualified employees in the latter part of 2020. The increase in employment is measured by determining the average number of full-time employees during the three-month period beginning April 1, 2020, and ending on June 30, 2020, compared to the average full-time employees over the five-month period beginning July 1, 2020, and ending November 30, 2020.

For each net increase in the average number of employees from the first period to the second period, the small business is eligible to receive either an income tax credit or a sales and use tax credit of $1,000 per employee. This will benefit employers who were forced to lay off workers and subsequently re-hired employees or hired new employees.

Application Process

The application process begins on December 1, 2020, and ends at the latest on January 15, 2021, or earlier if the maximum cumulative allocation of $100 million is reached before the January deadline. Because of this cap on total credits issued, employers interested in applying for the tax credits should do so as early as possible.

Applications must be submitted to the CDTFA. The CDTFA issues “tentative credit reservations” of $1,000 for each net increase in qualified employees. The credits are capped at $100,000 per small business.

The application is available on the CDFTA website along with frequently asked questions and other information: https://www.cdtfa.ca.gov/taxes-and-fees/SB1447-tax-credit.htm

Notebook with tax credit sign on a table. Business concept.

Notebook with tax credit sign on a table. Business concept.

Notebook with tax credit sign on a table. Business concept.

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Visit Our New Real Estate Portfolio

Boutin Jones’ real estate team represents clients with real estate projects in California and throughout the United States.

 

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SB 1383: California Family Rights Act | Complimentary Zoom Webinar on December 10, 2020

California Senate Bill (SB) 1383 has been signed into law by Governor Newsom. It will significantly expand the application of the California Family Rights Act (CFRA) and its family and medical leave entitlements to all public sector employers and those private sector employers with 5 or more employees.  Until now, CFRA only applied to employers with 50 or more employees.  In addition, SB 1383 also expands the qualifying reasons to take CFRA leave and eliminates previous restrictions on the use of such leave that distinguish it further from its federal law counterpart – the Family and Medical Leave Act (FMLA).  SB 1383 is effective on January 1, 2021. Attached for your review an Employment Law Guidance regarding SB 1383 to help you understand its impact on your business operations.

Employment Law Guidance – SB 1383

If you have any questions on this new law or if we can be of assistance in updating policies and procedures to implement the new law, please feel free to contact us.

To assist smaller employers with less than 50 employees who have not been previously covered under the CFRA leave law, Boutin Jones is also offering a complimentary Zoom webinar on Thursday, December 10, 2020, from 10:00 a.m. to 11:30 a.m. to outline the basics of CFRA leave, provide a general overview of how it will apply in the workplace, and answer questions.  Additional information on this webinar is noted in the attached Employment Law Guidance.  You can register for the webinar online at:  Boutin Jones CFRA Webinar

Employment Law Guidance - SB 1383

Webinar Information

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Proposition 19 Client Alert

Earlier in November, California voters approved Proposition 19, which may significantly increase property taxes when real property is transferred between a parent and child. This Client Alert explains the changes to current law and what to consider in deciding whether to take action before the new law takes effect on February 16, 2021.

 

Current Law Regarding Parent-Child Transfers

Under current law, a parent can transfer their principal residence to a child without a property tax reassessment, regardless of whether or not the child chooses to use the property as the child’s own principal residence. In addition, each parent can transfer up to $1 million of assessed value of other real property (e.g., vacation homes, commercial properties or agricultural property) to their children without a property tax reassessment. Together, two parents can transfer up to $2 million of assessed value of other real property to their children without reassessment. These reassessment exclusions apply whether the parent-child transfer occurs by sale or by gift during the parent’s lifetime, or by transfer following the parent’s death.

Changes under Proposition 19

Proposition 19 will significantly limit the ways a parent-child transfer of real property can be excluded from property tax reassessment. Only two types of transfers will be eligible for exclusion from reassessment on or after February 16, 2021:

  1.  A transfer of the parent’s principal residence to a child who uses the property as their own principal residence after the transfer; and
  2. The transfer of a family farm.

These two exclusions have value limits as well. The maximum value that can be excluded from reassessment is the current assessed value of the property plus $1 million. To the extent that the fair market value of the property exceeds the current assessed value plus $1 million, the excess will be reassessed. If the property’s fair market value at the time of transfer is less than $1 million more than the current assessed value, the property will receive a complete exclusion from reassessment for property tax purposes.

Consider Lifetime Transfers before February 16, 2021

If you own real property with a low assessed value in comparison to its fair market value and if your children are the beneficiaries of your estate plan, you should consider taking action before February 16 to minimize property taxes in the future by (1) making lifetime transfers, whether by gift or sale, (2) by using an entity such as a limited liability company (“LLC”) to hold the property, or (3) both lifetime transfers and using an entity.

Boutin Jones has a team of attorneys who are able to adjust your estate plan to this changing landscape. If you want to discuss your options in more detail with one of our attorneys, contact us before Proposition 19 takes effect this coming February.

Friendly girl explaining some documentation to parent

Friendly girl explaining some documentation to parent

Friendly girl explaining some documentation to parent

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Boutin Jones Inc. Adds Shareholder Gage C. Dungy to Firm's Employment Law Practice

Gage Dungy has joined Boutin Jones as a shareholder in the firm’s Employment Law practice. He will assist clients in addressing labor and employment issues before they become a greater liability for clients. Gage works with clients on all types of employment law issues such as harassment, discrimination, family and medical leaves of absence, wage and hour law, employment guidelines and policies as well as labor relations and negotiations between employers in collective bargaining negotiations. He is a graduate of the University of California, Davis School of Law and the University of Notre Dame.

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IP Institute Features "Latest Developments in Trade Secrets Law and Employee Mobility"

This year’s IP Institute has been retooled as the Shelter in Place Institute and the CLA Intellectual Property Law Section is making sure attendees won’t miss out on anything. Join us November 9—13 to get the latest updates on case law and find ways to navigate the practice of IP law in the COVID-19 landscape. Boutin Jones’ Jim McNairy joins Rebecca Edelson and moderator Robert Milligan on Friday, November 13 for “Session 18: Latest Developments in Trade Secrets Law and Employee Mobility.” All the sessions offer MCLE credits. To register and learn about the bundle discount, visit calawyers.org/event/shelter-in-place-institute/.

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Boutin Jones Adds to Corporate and Securities Group with Hiring of New Attorney Nicole Gonzalez

Nicole Gonzalez has joined Boutin Jones’ Corporate and Securities practice as an associate attorney. She will be assisting corporate clients with general corporate and governance needs as well as representing buyers and sellers in private mergers and acquisitions. Prior to joining Boutin Jones, Nicole was an Investment Management Associate at Skadden, Arps, Slate, Meagher & Flom LLP in New York.  She is a graduate of Columbia Law School and Duke University.

 

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Overview of Federal and State Criminal Tax Investigations

On November 5, 2020, Matt Carlson, Boutin Jones Tax Controversy attorney and former attorney for the Office of Chief Counsel, IRS, will pair with Ryan Korner, Special Agent in Charge, IRS Criminal Investigation, and Darrin Gutierrez, Deputy Chief, FTB Criminal Investigation Bureau, to provide an overview and update of federal and state criminal tax investigations. Their update will include recent developments and the unique issues presented in conducting investigations during the Covid-19 pandemic.

The program, “Overview of Federal and State Criminal Tax Investigations,” is part of the 2020 Annual Meeting of the California Tax Bar and California Tax Policy Conference and offers one hour of MCLE credit, as well as one hour of Legal Specialization credit in Taxation Law. Learn more: Overview of Federal and State Criminal Tax Investigations

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Proposed IRS Regulations Define “Real Property” for Section 1031

Jon Christianson and Matthew Carlson of Boutin Jones Inc., together with Louis Weller of Weller Partners, LLP, and Richard Lipton of Baker & McKenzie, LLP, were recently published in the October 2020 issue of the Journal of Taxation, “Proposed Regs Define ‘Real Property’ for Section 1031: IRS Gets It Mostly Right but Insists on Perpetuating Earlier Mistake.” The Tax Cuts and Jobs Act of 2017 changed the landscape for like-kind exchanges under Internal Revenue Code section 1031 by limiting tax deferral to exchanges of real property commencing on and after January 1, 2018. This article explores the new rules defining “real property” set forth in recent proposed Treasury Regulations under Section 1031.

Section 1031 Article (JTAX Oct 2020)

Section 1031 article (JTAX Oct 2020)