The Daily Rundown

The Small Business Daily Rundown: AB-5, Minimum Wage, Small Business Compliance

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Welcome back. With a week left in 2019, we’re already looking to 2020 and the way that California’s new worker classification law is impacting small businesses, the continuing trend toward increasing the minimum wage and New York’s new law to ease the compliance burden for small companies.

California law may change the way small companies do business

A new law in California that aims to protect gig workers from unfair labor practices will go into effect on January 1, 2020, and its implementation is already changing the way that many smaller companies do business. The law heavily restricts the way that businesses can use California-based independent contractors or freelancers and many SBOs are either hiring them as full-fledged employees or turning to independent contractors outside the Golden State.

The Number: 6.2%. By classifying workers as contractors instead of employees, companies avoid paying 6.2% of salary and wages for Social Security and Medicare — in addition to Workers’ Comp, disability and unemployment.

The Quote: “I don’t work with freelancers in California anymore because of the gig economy problems.”

Minimum wage momentum carries into 2020

Nearly 7 million U.S. workers will be seeing their pay go up starting January 1, 2020, thanks to the continuing push to raise the minimum wage. While only a handful of states and municipalities have reached the $15 minimum wage goal set by living wage activist groups, nearly half of the U.S. state enacted some sort of pay raise in 2019. Restaurant owners have coped by raising prices or cutting worker hours, while experts attribute the continuing popularity the pay hike to the historically tight labor market.

The Number: 21. Nearly half the country raised the minimum wage in 2019, with 21 states enacting raising. 

The Quote: “In 2019, pay growth has been sluggish, but the fastest for low-wage workers.”

New NY state law buys small businesses a little breathing room

New York’s governor Andrew Cuomo signed a new law into effect that will give small businesses a grace period to address any compliance infractions before they must pay a fine. The law is part of New York’s attempt to ease the compliance burden for small businesses, but will only apply to circumstances where the violations don’t result in serious actual harm, endanger public safety, human health or the environment or involve tax fraud.

The Number: 15. The new law gives small businesses 15 days to correct minor violations before they are subject to paying a fine. 

The Quote: “We continue to not only improve the tax climate here, but we also continue to try to improve the overall perception of New York state, that it is trying, and succeeding in some parts, on trying to be more business friendly.”


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