How California Contractors Can Avoid Disgorgement

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The construction industry is one that can be unpredictable. One of the main reasons for this is because every market is different. While one market may be doing well, another may be suffering. One component of the industry that can cause major issues for construction companies is something called disgorgement. If you want to avoid this in California, then you need to take the appropriate actions.

What is Disgorgement?

Disgorgement is a law or regulation that can require a business to give something up as demanded or through legal compulsion. In the construction industry, it means that the construction company may have to give back their profits from a project they have completed or are in process of completing. For example, if a contractor enters into a contract with a client to build a property, performs the work, receives payment, and then has to return the payment due to legal reasons, that is disgorgement in action.

Actions to Take to Avoid Disgorgement

Just as lenders, real estate agents, and investors stay up to date on different laws and regulations affecting their sides of the industry, contractors benefit greatly from understanding laws and regulations that could potentially affect their work. Obviously, disgorgement is not something that any contractor wants to happen to them. In order to avoid this, there are some key things you need to do and stay on top of so you can avoid it in your business.

  • Have a valid license. You and all of your employees should have a valid license. This means that you need to have your license during the time that you are performing the contractual work. You do not want to start a project without an active license. Not only would you open yourself to the possibility of disgorgement but you could also face some civil and criminal penalties such as jail time, fines, and more.
  • Have workers’ compensation insurance. You want to make sure that you have the proper insurance at all times during a project. Beyond that, you want to make sure that the insurance does not lapse at any time. Even though it is an extra expense, it is not one that you want to let lapse so you can save a few dollars. You could end up losing all of your money from the project as a result. You also do not want to list employees as independent contractors to save money on this insurance if they are not. Doing so could invalidate your contractor license immediately and you may not even be notified of this change. You could then be operating as usual and not even know you have lost your license.
  • Only collect payment for work completed. You do not want to take money for any work that has not been done or for materials that have not been delivered yet. It is against the law in California to do this and you must limit a down payment to $1,000 or 10% of the purchase price. Since this is law in California, it is important to follow it at all times, even if you are strapped for cash. If the working relationship between you and your client were to go bad, then they could use that against you in court and it could result in disgorgement.

As you can see, disgorgement is something that can be avoided. As long as you comply with the laws and regulations, you should not be in danger of disgorgement for your construction business.

Primary Election Day

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The California Presidential Primary Election will be held on June 7, 2016. Employees may take time off from work and have certain rights with regards to taking this time off. In addition, employers have posting obligations.

If an employee does not have sufficient time outside of working hours to vote, the employee may take up to two hours of working time to vote. The time off must be taken at the beginning or the end of the regular working schedule, whichever gives the employee the most free time for voting and the least time away from work. The employee must notify the employer at least two working days in advance to schedule voting time.

Employers must display a poster describing voting leave requirements at least 10 days before every statewide election. For information on the voting leave poster and all required posters and notice, please contact your HR Representative.

Governor Signs Job Creator Promoting Disability Access

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The job creator bill that incentivizes disability access and education was signed by Governor Brown this week. SB 269, will limit frivolous litigation and claims regarding construction-related accessibility violations by providing businesses that have proactively sought to become compliant with the Americans with Disabilities Act (ADA) with an opportunity to resolve any identified violations. As this is an urgency measure, SB 269 took effect immediately upon being signed on May 1st.

The bill seeks to incentivize businesses to proactively take steps to become accessible by providing them with 120 days from receipt of a Certified Access Specialist report to resolve any violations identified without being subject to statutory penalties or litigation costs. This proposal will assist businesses who are trying to ensure they are compliant from being subject to frivolous claims or litigation. This bill also provides a limited time for businesses to resolve violations of minor, technical construction related standards that do not actually impeded access to the public accommodation.

Urgent Deadline 4/1/16

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California FEHA (California Fair Employment and Housing Act) created a new notice and poster required of California employers as of April 1, 2016. (2 CCR § 11051.)

The new poster expands the details around the rights of pregnant employees and employers obligations. Remember, California protects all employees under sex discrimination and harassment which includes pregnancy, childbirth or any related medical condition.

Posting Requirements

Employers with 5 (five) or more employees must post the new notice effective April 1, 2016. It should be posted alongside of other required posters in a place where employee frequently visit and will likely see.

Additionally, you as the employer MUST give the employee a copy of the posting as soon as she tells you she is pregnant. Information about Pregnancy Disability Leave and other leaves must be included in your employee handbook. Remember, if you have 50 or more employees, the employee may also be eligible under CFRA (California Family Rights Act) and FMLA (Family and Medical Leave Act).

Lastly, if 10 percent or more of your employees speak a different language other than English, you must translate the notice into that language. Thus far, the notice has only been made available in English by the State of California.

If you have any questions, please contact your HR Representative or send an email to [email protected]

Dealing with Customers-WORKPLACE VIOLENCE

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The Unruly Customer

Make the Workplace Safer

  • Everyone should be trained on what to do with an unruly customer or client.
  • Robberies, irate customers, and other acts of violence should be addressed and everyone should have a plan for how to deal with them.

    Follow Safe Work Practices

  • Always be aware of your surroundings.
  • When dealing with unruly customers, keep your cool; if you feel you cannot handle the situation, bring someone else in who may be able to calm things down.
  • Never escalate the situation; raising your voice, yelling or screaming above an unruly customer never helps the situation.
  • Try to calm down and be rational with the customer.
  • If you feel threatened back off from the customer.
  • Bottom line, you are the professional and must act like it.
  • Immediately contact your Supervisor if you feel you have a situation you cannot handle.

    Workplace Violence

    Make the Workplace Safer:

  • Every employee should know their responsibilities in an emergency situation.
  • In your head, practice various emergency responses; plan and strategize so

    that you can safely deal with a variety of emergencies. Follow Safe Work Practices:

  • Workplace violence includes acts of violence against an employee and can be from another employee or a customer.
  • Keep calm during workplace violence and follow the instructions of your supervisor.
  • Most forms of workplace violence have their roots in some type of harassment such as bullying.
  • When evacuating an area, assist any employees or customers who may need help.
  • When dealing with money, vary your routine (such as money counting or bank drops).
  • Never count money in the open in front of other employees or customers.
  • When leaving the business at night, have a co-worker walk with you and always try and stay in a well-lit area.
  • If you feel something is not right, notify your Supervisor immediately
  • If you feel you are being harassed, follow your company’s Unlawful Harassment policy and report the incident to your supervisor or manager.
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