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Brian Koegle: Employment-law updates business owners should be apprised of

Posted: December 30, 2010 4:36 p.m.
Updated: December 31, 2010 4:30 a.m.

As 2010 draws to a close, many businesses are looking forward to ushering in a new year. 

For those who have survived the treacherous economic slide over the last two years (or more, depending on the industry), many are poised to re-emerge leaner, more productive and ready to thrive in 2011.

For the owners of those businesses, New Year’s Day not only brings with it new hope, possibility and vision for the future, but also a bevy of new laws, regulations and potential pitfalls, which could lead to costly disputes and litigation. The following are a few of the new requirements for employers to be aware of as they move toward a prosperous and compliant new year:

Mileage-reimbursement rate changes
On Dec. 3, the Internal Revenue Service published its revised guidelines for mileage reimbursement, which will go into effect on Jan. 1.

For business-related travel in an employee’s personal vehicle, the reimbursable rate increased to 51 cents per mile, an increase of 1 cent from the 2010 rate.

In California, an employer is required to indemnify its employees for all “necessary expenditures or losses” incurred by the employee in direct consequence of the discharge of his or her duties (Cal. Labor Code §2802). If an employer reimburses the employee at the IRS-approved rate, that payment is presumed to be sufficient. If an employer chooses to reimburse the employee at a rate other than the IRS approved standard, the burden falls squarely upon the employer to establish that the rate was adequate under the circumstances to reimburse the employee for his/her actual business-related expenses.

As such, it is recommended that, except under very limited circumstances, California employers should reimburse at the IRS-approved rate.

Limitations on health care flexible spending accounts (FSA)
Effective January 1, 2011, an employee will no longer be able to report over-the-counter medications as eligible expenses under qualified FSAs, absent a written prescription from a health care provider.  Ordinarily under an FSA, an employee is able to obtain reimbursement for any out-of-pocket medical expenses including co-payments, medical insurance deductibles, prescription drugs or treatments and — at least until today — over-the-counter medications, including aspirin, decongestants and antacids.

Heat injury and illness regulations
For those employers who are required to maintain a Heat Injury and Illness Prevention Program (HIIPP), including those with employees who work outdoors or in unventilated spaces,  Cal-OSHA has issued revised regulations and clarifying definitions, which can be found at

“Serious safety violation” investigations
The California legislature has changed what is considered a “serious safety violation” for purposes of a Cal-OSHA investigation.  If discovered, a “serious safety violation” triggers greater potential liability and statutory penalties for the employer. 

The standard for a serious safety violation, prior to the passage of AB 2774 (2010 session), was whether an employee’s action had “a substantial probability that death or serious physical harm” would result.  The new, more-relaxed standard set forth in the statutory language creates “a rebuttable presumption that a serious violation exists if Cal-OSHA demonstrates that there is a realistic possibility that death or serious physical harm could result from the actual hazard created by the violation.” (AB 2774, codified into Cal. Labor Code §6432).  Consequently, it will be easier for Cal-OSHA investigators to establish that a violation rises to the aggravated level of “serious,” thus creating greater financial liability for the employer.

Minimum-wage increase
The city of San Francisco passed an ordinance in 2010 which will increase the minimum wage to $9.92 per hour.  For businesses with employees who work in The City, this increase will go into effect on Sunday, which will also require the employer to display new posters as updated by the San Francisco Office of Labor Standards Enforcement, which can be found at

Remember that year-end is an excellent time to review and revise all written employment policies and procedures, to update employee handbooks and job descriptions, and to meet with your employment attorney to make sure your company is poised to thrive in a challenging and perilous business environment.

Brian Koegle is a partner at the law firm of Poole & Shaffery LLP. He may be reached by email at  Mr. Koegle’s column represents his own views, and not necessarily those of The Signal.  It’s The Law appears Fridays and rotates between members of the Santa Clarita Valley Bar Association. www/  Nothing contained herein shall be or is intended to be construed as providing legal advice.


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