Winter 2024
Nonprofit News
Table Of Contents 03 Wage & Hour
13 Saving Green By Going Green
04 Labor Commissioner Issues Updated Mandatory Employee Notice Template
14 New Laws
05 Leaves of Absence 08 Workers' Compensation 11 IRS Updates for Nonprofits
15 Construction Corner 18 Benefits Corner 21 Did You Know? 24 Featured Consortium Calls
Contributors: Allison L. Berquist Associate | Los Angeles Kiyoshi M. Din Associate | Sacramento Hannah Dodge Associate | San Francisco Alison Kalinski Senior Counsel | Los Angeles
Stephanie Lowe Senior Counsel | San Diego Brett Overby Senior Counsel | San Diego Patrick Skahan Senior Counsel | Los Angeles
Connect With Us! Copyright © 2024 Requests for permission to reproduce all or part of this publication should be addressed to Cynthia Weldon, Director of Marketing and Training at 310.981.2000. Cover Photo: Attributed to pexels.com
Nonprofit News is published monthly for the benefit of the clients of Liebert Cassidy Whitmore. The information in Nonprofit News should not be acted on without professional advice. To contact us, please call 310.981.2000, 415.512.3000, 559.256.7800, 916.584.7000 or 619.481.5900 or e-mail info@lcwlegal.com.
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New Minimum Wage Law (SB 525) Sets Higher Wages For Certain Health Care Employees. By: Hannah Dodge What is Senate Bill 525? Senate Bill 525 (SB 525) is a new California law that raises the minimum wage for covered health care employees. SB 525 went into effect on January 1, 2024. It periodically raises the minimum wage over a number of years using four separate wage increase schedules based on the type of health care facility. SB 525 is codified at California Labor Code Section 1182.14. Who and What is Covered by SB 525? SB 525 applies to entities that employ “covered health care employees” that work in “covered health care facilities.” Expansive lists of “covered health care employees” and “covered health care facilities” are set forth in the statute and warrant careful review with counsel should you operate a nonprofit that provides health care services or health care related services. For example, SB 525 broadly defines the term “covered health care facilities,” which includes, but is not limited to (a) licensed special, acute care, or psychiatric care hospitals as defined in Section 1250 of the Health and Safety Code; (b) certain clinics, including community clinics and rural health clinics; (c) mental health rehabilitation centers as defined in Section 5675 of the Welfare and Institutions Code; and (d) physician groups, among other entities. “Covered health care employees” are employees who work for a health care facility employer to provide patient care, health care services, or services supporting the provision of health care. This statutory definition is very broad and includes employees as diverse as physicians, patient care technicians, interns, food service staff, billing personnel, and laundry workers. “Covered health care employees” can also include contracted or subcontracted employees where a covered employer exercises control over the employee’s wages, hours, or working conditions.
Winter 2024
WAGE & HOUR The New Minimum Wage Schedules Under SB 525, the minimum wage for covered health care employees at covered health care facilities in the private sector, which includes nonprofits, will increase on June 1, 2024 to $25 per hour over a period of between two to nine years, depending on the wage schedule applicable to the covered health care facility. Once the SB 525 minimum wage reaches $25 per hour, it will then be adjusted on an annual basis using a formula equivalent to the state minimum wage increase formula. How Does SB 525 Affect Salaried Employees? SB 525 states that for a covered health care employee to qualify as exempt from minimum wage and overtime law, they must earn a monthly salary of at least 150% of the health care worker minimum wage or 200% of the applicable minimum wage, whichever is greater. How Does SB 525 Affect Overtime and Other Wage and Hour Laws? The applicable minimum wages in SB 525 constitute the state minimum wage for covered health care employment for all purposes under the Labor Code and Wage Orders of the Industrial Welfare Commission. Waivers The SB 525 requirements can be waived. The Department of Industrial Relations must develop a waiver by March 1, 2024. The waiver will allow a covered health care facility to apply for a temporary pause or alternative phase-in schedule of the minimum wage requirements. Waivers can be renewed, but the entity must apply to renew a waiver at least 180 days before it expires. Moratorium on Local Wage Regulation SB 525 contains a 10-year moratorium on local ordinances, regulations, or administrative actions that would impose wage or compensation requirements for covered health care facility employees, subject to limited exceptions. The moratorium began on September 6, 2023 and expires January 1, 2034. Consult with legal counsel to evaluate whether this provision applies to counties and charter cities.
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Labor Commissioner Issues Updated Mandatory Employee Notice Template The Labor Commissioner has issued an updated Labor Code Section 2810.5 Notice to Employees, which is the notice that covered employers must provide to nonexempt employees at the time of hire that provides basic information about their employment, such as rates of pay, employer’s name, and paid sick leave benefits. The updated Notice to Employees reflects the changes to California’s paid sick leave law that take effect on January 1, 2024, and also includes a section for employers to include information regarding the existence of a federal or state emergency or disaster declaration applicable to the county or counties where the employee is to be employed that was issued within 30 days before the employee’s first day of employment and that may affect the employee’s health and safety during their employment, a requirement that took effect on January 1, 2024 as well. Nonprofit organizations should make sure they are providing all non-exempt employees hired on or after January 1, 2024, at the time of hire, the updated template Labor Code Section 2810.5 Notice to Employees, and should discontinue using prior versions of the notice, as these will no longer be legally compliant as of January 1, 2024.
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As a reminder, Labor Code Section 2810.5 requires employers to notify employees in writing of any changes to the information set forth in the Labor Code Section 2810.5 Notice to Employees within seven (7) calendar days after the time of the change, unless one of the following applies: 1. All changes are reflected on a timely wage statement furnished in accordance with California law. 2. Notice of all changes is provided in another writing required by law within seven (7) days of the changes. Nonprofit organizations should make sure to provide written notice to any non-exempt employees whose paid sick leave information changed effective January 1, 2024, consistent with this obligation, including meeting the applicable timelines.
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What Employers Need to Know about California’s New Reproductive Loss Leave Law. By: Alison Kalinski It was Friday, July 5, 2013. I was sitting in my doctor’s office. I was desperately hoping I was fine, but had a sinking feeling I was having a miscarriage. The doctor’s office was packed because it was closed the day before. I was anxious, scared, and had a current of emotions coursing through me. If that wasn’t enough to worry about, a partner I was working for at my law firm at the time (not LCW) kept emailing me asking when I could meet that day to discuss a case. While I did not want him thinking I was making excuses and secretly taking off for the long weekend, I did not feel comfortable saying anything more than I was at a doctor’s appointment. He kept asking me when I would be in, but I had no idea how long it would take, and felt that if my suspicions unfortunately proved to be true, I would not be mentally or physically able to go into the office that day. In the end, I was having a miscarriage, I did not go into the office, and told him I was sick and could not meet. I did however go on a business trip with that partner on Monday and pretend everything was fine, when it certainly was not.
Now with recently enacted legislation, California employees will have the right to leave for reproductive loss that will hopefully avoid them having to face the pressure of working when suffering a miscarriage or other reproductive loss. On October 10, 2023, Governor Newsom signed Senate Bill No. 848 which requires employers with five or more employees to provide up to five days of Reproductive Loss Leave for employees starting January 1, 2024. California is the second state to provide employees with Reproductive Loss Leave. Requirements of Reproductive Loss Leave Who does the law apply to? Employers with five or more employees and the state and any political or civil subdivision of the state, including, but not limited to, cities and counties. Who is eligible to take reproductive loss leave? An employee that has worked for the employer for 30 days and has suffered a reproductive loss event. A “reproductive loss event” is defined as “the final day of a failed adoption, failed surrogacy, miscarriage, stillbirth, or an unsuccessful assisted reproduction.” “Assisted reproduction” “means a method of achieving a pregnancy through an artificial insemination or embryo transfer.” (Cal. Govt. Code sections 12945.6 (a)(1) and (7).) • www.lcwlegal.com •
Winter 2024
LEAVES Of Absence How much leave is an employee able to take, and when can they take the leave? The employee is able to take up to five days of leave, which must occur within three months from the reproductive loss event. However, if the employee uses Pregnancy Disability Leave (PDL) or leave under the California Family Rights Act (CFRA), the leave can commence within three months from the end of that leave. The leave can be on nonconsecutive days. Can employees take Reproductive Loss Leave more than once? Yes. If an employee experiences more than one reproductive loss event within a 12-month period, an employer must allow the employee to take up to 20 days of Reproductive Loss Leave within a 12-month period. Are employees required to be paid on leave? Reproductive Loss Leave shall be taken pursuant to any existing applicable leave policy of the employer. In the absence of a leave policy, Reproductive Loss Leave is unpaid. Employees can use sick, vacation, or other available paid leave. Are employees required to submit documentation? No, the law does not require employees to submit any documentation or medical certification to take Reproductive Loss Leave.
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Anything else employers should know about Reproductive Loss Leave? Yes! 1. The law requires confidentiality. All information employees provide to request Reproductive Loss Leave should be kept confidential and only shared with internal personnel or counsel as needed. 2. Like with PDL and CFRA, employers may not interfere with an employee’s right to take Reproductive Loss Leave, or retaliate against employees for requesting or taking this leave. 3. Employers should create written policies providing Reproductive Loss Leave to employees. 4. It should be understood that employees undergoing a miscarriage, failed adoption, or other reproductive loss event are suffering mentally and/or physically. Employers should provide notice to all employees on the availability of Reproductive Loss Leave. Create a workplace that is open and inclusive and where employees can feel secure in their jobs and not fear retaliation from requesting or taking Reproductive Loss Leave. Employers should be supportive of employees requesting this leave, not pressure them to work through it, and should also be understanding that allowing employees this leave to heal or grieve, will allow employees to come back to work more focused and able to perform at their best.
Court Upholds School’s Termination Of Long-Time Employee Following Indefinite Medical Leave. Nancy Der Sarkisian was an English teacher at Austin Preparatory School, a private Catholic independent school in Reading, Massachusetts, for twenty-four years. In September 2019, Der Sarkisian underwent hip surgery and told the School she would be out for approximately four weeks. The School granted her request for leave and hired a substitute teacher to cover her classes. Der Sarkisian intended to return to School in October 2019, but she then required a second surgery and so she informed the School she would need leave for the entire first semester. The School requested that Der Sarkisian’s doctor provide an updated Family Medical Leave Act (FMLA) Certification because the leave was going to be longer than initially represented. In the certification, Der Sarkisian’s doctor opined that Der Sarkisian would likely require 2-3 months to recover, and would not be able to return until January 5, 2020. The School gave
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Der Sarkisian information about the School’s long-term disability program at this time. In November 2019, Der Sarkisian completed the long-term disability program application and notified the School that she required a third surgery and was unsure when she could return to school. Der Sarkisian told the School she required intravenous injections of antibiotics at home until at least February 7, 2020. Shortly thereafter, Der Sarkisian told the School she would need additional time to rehabilitate following her three surgeries. At this point, Der Sarkisian had exhausted her available FMLA and sick leave, so the School asked her to have her doctor complete an accommodation form so the School could determine whether there was a reasonable accommodation that would allow Der Sarkisian to perform the essential functions of her job. Der Sarkisian’s doctor indicated that her impairment would last three to six months, it affected a number of her major life activities, and she would have difficulty performing all of her job functions. Der Sarkisian’s doctor did not suggest any accommodations aside from total temporary disability. After reviewing the accommodation form on December 26, 2019, the School terminated Der Sarkisian’s employment, stating that they had a growing need to fill her position and could not provide an extended and continuing leave of absence with no set end date. Der Sarkisian sued the School for discrimination under the Americans with Disabilities Act (ADA) and related Massachusetts law. The trial court granted the School’s motion for summary judgment, holding that regular attendance was an essential function of Der Sarkisian’s role when she was terminated. The trial court concluded that Der Sarkisian had not satisfied her burden to demonstrate that a reasonable accommodation existed that would have allowed her to perform this essential function, and therefore she could not make out a disability discrimination case. Der Sarkisian appealed. To establish a claim for disability discrimination, Der Sarkisian must show that (1) she was disabled within the meaning of the ADA; (2) she was a “qualified individual;” and (3) she was discharged because of her disability. The Court of Appeals concluded that Der Sarkisian’s claim failed at step one because she did not demonstrate that she was a qualified individual. While Der Sarkisian held the skills and qualifications to teach at the School, the Court of Appeals agreed with the trial court that in-person attendance was an essential function of her job. The Court of Appeals determined that a further extension of her leave
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Winter 2024
of absence would not have allowed her to perform her essential functions. The Court of Appeals also agreed with the trial court that Der Sarkisian did not carry her burden to demonstrate that her request for a further leave of absence was facially reasonable. Der Sarkisian argued that the School’s former policy of offering 110 sick days and a year-long unpaid leave of absence demonstrated that her request was reasonable. The Court of Appeals disagreed. The School deliberately removed those policies from their handbook before the school year at issue, and instead offered a disability insurance policy, from which Der Sarkisian received benefits. On appeal, Der Sarkisian also argued that she would have taken an unpaid leave of absence and the School could have had other faculty members cover her classes pending her return. The Court of Appeals said that the School did not have to lower its employment standards or reallocate essential functions of Der Sarkisian’s job to make other faculty jobs more onerous in order to accommodate Der Sarkisian. Moreover, these accommodations would not have satisfied the School’s need for instruction of Der Sarkisian’s five classes and the need to give students continuity throughout the school year. The Court of Appeals upheld the trial court’s decision and granted summary judgment for the School. Der Sarkisian v. Austin Preparatory Sch. (1st Cir. Nov. 7, 2023) 2023 U.S. App. LEXIS 29679. Note: LCW reported on this case in February. This case shows that an employer may not need to provide an indefinite leave of absence for employees if the employer maintains appropriate documentation and justification as to why the leave would be unreasonable.
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Don’t Delay. Train Today. Visit our website for all our on-demand offerings: www.lcwlegal.com/events-and-training/on-demand-training • www.lcwlegal.com •
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WORKERS' COMPENSATION
Workers’ Compensation Is Employee’s Exclusive Remedy Following Bike Accident At Workplace. Rose Jones worked as the director of scholarship opportunities at the University of California, Irvine. One day, when leaving her office at the University’s science library, Jones walked her bike a short distance to the bike path, mounted her bike, and began riding toward her home. After about 10 seconds, Jones reached a trench, cordoned off with orange posts and caution tape. Upon noticing the obstacle, she swerved and attempted to brake, but fell off her bike and sustained injuries. After the accident, Jones sued the University for negligence and premises liability, among other claims. Following discovery, the University moved for summary judgment, claiming that Jones’ injuries occurred within the course of her employment and therefore workers’ compensation was the exclusive remedy for her claim. The University argued that Jones was still on the University’s premises when she sustained her injuries, and therefore was still within the scope of her employment. Jones argued that she was leaving work, rather than arriving, within an area designated for public use and using the means of her choice to commute across UCI’s large campus. Jones argued that these factors supported that she was not within the scope of her employment. The trial court granted the University’s motion for summary judgment, concluding that Jones’ injuries occurred within the course of her employment and that she did not exercise due care at the time of the accident. Jones appealed.
designated, and her route was not reserved for employees but also used by students and the general public; and (3) the University’s campus was large. The Court of Appeals explained that under the “premises line rule,” an employee’s commute terminates and the course of their employment commences when the employee enters the employer’s premises. In other words, once the employee enters the premises, an injury is presumed to be compensable until the employee leaves the employer’s premises. The Court of Appeals concluded that Jones’ injuries occurred on UCI’s campus, undisputedly owned by the University, just after she left her workstation. Under these circumstances, the premises line rule brought Jones’ injuries within the workers’ compensation scheme. The Court of Appeals was not persuaded by Jones’ arguments. The premises line rule applies whether an employee is leaving work or arriving at work, and traveling via roads that are used by the general public and non-employees does not change the analysis. Furthermore, although the University’s campus is large, the “premises line rule” allows a sharp line of demarcation so that courts do not have to make subjective determinations as to where employment begins. The Court of Appeals affirmed the trial court’s ruling. Jones v. Regents of the University of California (2023) 97 Cal. App. 5th 502. Note: This case serves as an important reminder that injuries that occur as employees are leaving work can still be within the scope of their employment. Here, workers’ compensation acted as the sole remedy for this employee’s injury, reducing the overall liability to the University.
On appeal, Jones argued that (1) she was leaving work, rather than arriving; (2) her means of commute were not employer-
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Winter 2024
LCW Partner Melanie L. Chaney Named 2024 Leaders of Influence: Minority Attorneys.
Daily Journal awards Partner Brian Walter as 2024 "Leading National Litigators"
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Nonprofit Telephone Consultation Questions & Answers Consortium services include telephone consultations. Members of each consortium have come to rely on the opportunity to pick up the phone and ask questions of an attorney. The following examples are designed to illustrate this aspect of consortium services.
What is a consortium call? A consortium call is the member’s opportunity to consult with an attorney on any legal issue that does not require factual analysis, document review, or ongoing advice. This includes matters relating to operations and governance, maintaining tax-exempt status, employment matters, grants and contracts, fundraising, labor relations, and construction.
Is this phone call covered by the general consortium fee? Yes.
What if the question requires the attorney to do legal research or write an opinion letter? The attorney will advise you that it will be billed at the attorney’s regular hourly rate. No work will be done until you have given authorization.
What if the attorney tells me my call will require them to quickly look something up and will call me right back? Normally that is considered part of a normal consortium call covered by the annual consortium fee.
How many aggregate hours of consortium calls do I get in one year? You get 12 hours per year. The time will be tracked in minimum units of one tenth of an hour.
How many times a day or week can I call with a consortium question? There is no limit on the number of times you may call in a day or week, as long as it falls within the 12 hours.
Who should be using this service? Leadership team member (Executive Directors/CEOs, CFOs, COOs, VPs), director level employees (e.g., HR Directors, Compliance Directors), directors, business officers, and other and any other administrators, managers, or other team identified to us by the member organization.
What phone number should I use? You are welcome to call any of our offices or submit your question via email. 310.981.2000 (Los Angeles) 415.512.3000 (San Francisco) 619.481.5900 (San Diego) 10
559.256.7800 (Fresno) 916.584.7000 (Sacramento) AskLCW@lcwlegal.com
www.lcwlegal.com
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Winter 2024
IRS UPDATES FOR NONPROFITS IRS Revenue Procedure for 501(c)(3) Provides New Procedure for Organizations Seeking Different 501(c) Recognition. By: Brett Overby On January 2, 2024, the IRS released Revenue Procedure 2024-5 (Rev. Proc. 2024-5), which updates a prior revenue procedure that sets forth the procedures for issuing Exempt Organization (EO) determination letters. Organizations that are already recognized as tax-exempt under 501(c)(3) may apply for recognition under other paragraphs of Section 501(c), such as a tax exempt social welfare organization under 501(c)(4). Notably, Rev. Proc. 2024-5 provides that when a recognized 501(c)(3) organization applies for recognition under a different paragraph of Section 501(c), the IRS will now issue an EO determination letter to that organization if it establishes that as of the submission date of its application, it: 1. Has distributed its assets to another Section 501(c)(3) organization or government entity, and 2. Otherwise meets the requirements for the Section 501(c) status requested. The currently recognized 501(c)(3) organization must also include the following in its supplemental responses to the applicable recognition application: 1. Represent that its assets have been distributed as of the submission date of its application and provide a description of the assets distributed, the date of distribution and the name, EIN, and address of the recipient and 2. Agree to submission (postmark) date for recognition under the new paragraph of Section 501(c) Any new EO determination letter that may be issued will only be effective from the submission (postmark) date of the new recognition application under the new Section 501(c) paragraph.
LCW has launched our 36th consortium, dedicated specifically to California Nonprofit organizations! Membership includes: • Three workshops to which members may send as many people as they would like • Recordings of the workshops that members may access and share internally for three months • Access to our growing resource Library • Twelve (12) hours of complimentary telephone consultation • A copy of our Nonprofit News, an LCW newsletter published quarterly • Ability to attend the other 35 consortium’s workshops at no additional charge (space permitting) • Discounts on other LCW sponsored webinars and events • www.lcwlegal.com •
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Organizations that had their Section 501(c)(3) status automatically revoked under Section 6033(j) for failure to file required returns or notices and seek retroactive reinstatement under a different paragraph of Section 501(c), may also take advantage of this procedure. Importantly, Section 501(c)(3) organizations seeking to be recognized as described in Section 501(c)(4) must file a Form 8976, Notice of Intent to Operate Under Section 501(c)(4), within 60 days of formation as new Section 501(c)(4) organizations. Reasonable cause relief from any penalty for late filing of the Form 8976 may be available under certain circumstances. This new procedure provides a more streamlined approach for 501(c)(3) organizations that want to be recognized under a different 501(c) paragraph, such as transitioning from a charitable organization to a social welfare one. LCW attorneys are available to assist any 501(c)(3) organizations that are interested in being recognized as a 501(c)(4) or other 501(c) organization, or are interested in learning about the benefits of making this change. For example, a benefit of being recognized under 501(c)(4) is the ability to further the organization’s exempt purpose through lobbying.
Form 990-T and Form 1120-POL Filers E-Filing Updates.
• An organization with a Form 990-T due from January 15 to March 15, 2024 should request an automatic six-month extension of time to file by submitting Form 8868, Application for Extension of Time To File an Exempt Organization Return by the due date of the return, with any balance due to avoid interest and penalties. • Beginning March 17, 2024, organizations will be able to timely e-file Form 990-T by the extended due date. Form 1120-POL • Applies to political organizations and certain exempt organizations required to report their taxable income under 26 U.S.C. Section 527. • An organization that is required to e-file a return due between from January 15 to March 15, 2024 should request an automatic six-month extension of time to file Form 1120-POL by submitting Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, and paying the full balance due with that form to avoid interest and penalties. Taxpayers with due dates on April 15, 2024 and later will be able to e-file Forms 990-T and Forms 1120POL on time.
By: Allison L. Berquist On January 18, 2024, the Internal Revenue Service (IRS) announced that due to IRS system upgrades, certain organizations that must e-file Form 990-T (Exempt Organization Business Income Tax Return) or Form 1120-POL (U.S. Income Tax Return for Certain Political Organizations) will not be able to electronically file these forms until March 17, 2024. Organizations who need to file between January 15, 2024 and March 15, 2024 should follow the below instructions: Form 990-T • Applies to organizations subject to the unrelated business income tax (UBIT) (exempt organization that has $1,000 or more of gross income from an unrelated business).
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Winter 2024
Saving Green by Going Green: Renewable Energy Tax Incentives for Nonprofits By: Kiyoshi M. Din In 2022, Congress passed the Inflation Reduction Act (“IRA”) which greatly increased availability of tax credits for renewable energy projects for tax-exempt organizations. Nonprofit organizations can now benefit from a wide range of tax incentives to make their practices more eco-friendly. The following is a brief overview of the new and substantial tax credits available to nonprofits. The Investment Tax Credit for Energy Property (“ITC”): For projects beginning construction prior to January 1, 2025, the IRA provides a potential ITC of 6% (base amount) to up to 30% or higher of qualified investment costs of a renewable energy project. Additionally, the credits can increase up to 50% if the projects meet certain domestic content or location requirements. Fuel cell, solar, geothermal, small wind, energy storage, biogas, microgrid, controllers, and combined heat and power properties are examples of projects eligible for this tax credit. These credits can increase up to 50% in three ways: • Projects that meet the prevailing wage and apprenticeship requirements may increase the tax credit up to 5 times the base amount, i.e. up to 30%. • A 10% increase if the project meets certain domestic content requirements. • A 10% increase if the project is on a property in an “energy community,” e.g. certain low-income communities. The ITC is available in the tax year when the project is first “placed in service.” (e.g. for a solar project, when it is first connected to the grid.) There is also a 5 year recapture period for the ITC. For example, if the organization sells the solar system back a year after it is placed in service, it will be required to pay back 80% of the credit. If it sells it back in 2 years, it will be required to pay back 60% of the credit, and so on. Direct Pay Reporting One main benefit of the ITC is that nonprofits installing eligible clean energy upgrades can benefit from direct pay, or elective pay, if they have placed into service such upgrades after January 1, 2023. The IRA now gives nonprofits the option to receive a direct payment from the Internal Revenue Service (“IRS”) in lieu of a tax credit. Nonprofits may use the direct pay option to receive a lump sum of cash grants equal to the credit amount, helping to offset costs over the next decade. The Renewable Electricity Production Tax Credit (PTC): Alternatively, organizations can elect to apply for the PTC. The PTC is a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. The PTC amount varies depending on the project’s start date, wages, apprenticeship, domestic content requirements, and location in an energy community. Facilities generating electricity from renewable sources are eligible for the PTC for 10 years, allowing for tax benefits to be consistently applied over time. • www.lcwlegal.com •
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Qualified Commercial Clean Vehicles Credit: Nonprofits may also receive a tax credit for investing in a new fleet of commercial clean vehicles. For qualified vehicles under 14,000 pounds, the maximum credit is $7,500, and $40,000 for all other vehicles. While the credit amount is capped, there's no limit on the number of vehicles eligible for the credit. Alternative Fuel Vehicle Refueling Property Credit: Nonprofits in low-income communities can also receive a tax credit for alternative fuel vehicle refueling and charging property. The IRA now allows nonprofits to claim a 6% base credit up to a maximum credit of $100,000 for the installation of alternative fuel vehicle refueling and charging property in low-income and rural areas. IRS Pre-Filing Registration Tool The IRS recently announced that qualifying tax-exempt organizations can register through the IRA/CHIPS Pre-Filing Registration Tool in order to receive a registration number. Interested taxpayers should complete and submit the pre-filing registration request no earlier than the beginning of the tax year in which the taxpayer they will earn the credit it wishes to monetize with an elective payment election or transfer election. Conclusion: Nonprofit organizations now have many opportunities to leverage the IRA's clean energy tax incentives for various projects, from building improvements to vehicle fleet upgrades. This is a new and exciting development that can significantly help nonprofits looking to develop renewable energy projects and reduce their carbon footprint in the years to come. Please feel free to reach out to LCW’s team for any additional questions regarding these new tax incentives. For more information, see 26 U.S. Code § 48; See IRS Notice 2024-9, available at: https://www.irs.gov/pub/irs-drop/n-24-09. pdf; https://www.irs.gov/credits-deductions/register-for-elective-payment-or-transfer-of-credits
New Laws in effect january 1, 2024
The start of the new year brings with it new legislation. Here are some key laws that took effect January 1, 2024, that nonprofit organizations should be aware of: • SB 616 - This amendment to California’s paid sick leave law, raises the amount of paid sick leave and carryover of that leave in each year of employment. The “full amount of leave” will be five days or 40 hours, instead of the current three days or 24 hours. • SB 848 - Employees will be entitled to “Reproductive Loss Leave.” Eligible employees are entitled to five days of unpaid leave following a reproductive loss event, which includes miscarriage, failed surrogacy, stillbirth, unsuccessful assisted reproduction, or failed adoption. (See article above) • AB 2188 - This law prohibits discrimination against an employee on the basis of that employee’s off-the-job marijuana use. Nonprofit organizations must ensure their employment-related drug tests do not screen for non-psychoactive cannabis metabolites. • Labor Code Section 6401.9 - This law requires that by July 1, 2024, employers in California must develop and implement a written Workplace Violence Prevention Plan ("WVPP"), provide training to employees on the plan, and start maintaining a log of incidents of workplace violence. LCW we will be providing training to clients and their employees on the new legal obligations under the WVPP. For a full list of the new laws that went into effect this year, please see LCW’s legislative update.
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Winter 2024
Construction Corner LCW represents and advises nonprofit organizations in various business, construction, and facilities matters, including all aspects of construction projects from contract drafting and negotiations to course of construction issues. Through this Construction Corner, LCW will be giving nonprofit organizations monthly helpful tips on a variety of topics applicable to workplace construction projects. LCW attorneys are available should you have any questions or need assistance with any construction projects no matter what phase you may be in currently. Setting Expectations: How To Contract With Architects For The Construction Phase. By: Patrick Skahan When working with architects, owners should be aware of the myriad issues that can arise during construction that may call for an architect’s review. Owners should therefore require contract terms at the outset that establish the scope of the architect’s work during construction to meet owner expectations and assist with successful project completion. Setting clearly defined roles for the architect from the start of the relationship can result in costsavings, increased efficiencies, and timely completion of the project. This article presents methods to guard against cost overruns and project delays during the construction phase through the architect’s design professional contract. Most of an architect’s work occurs before construction on the project begins. During construction, however, architects continue to perform tasks and those tasks are often an overlooked portion of the architect agreement. Such tasks include site visits, quality control to evaluate the contractor’s work and confirm the work meets design intent, communicating with the owner and contractor, reviewing and certifying payment applications, reviewing change order proposals, responding to submittals, handling disputes, and processing closeout of the project. Owners should check the language of their architect agreement before committing their architect to do construction phase work that may be outside the scope of their engagement or create costly additional services by the architect. Similarly, when contracting with the architect, owners should identify any work that may not be necessary for the architect to perform during the construction phase. The Business and Professions Code sets forth specific requirements for contracts with architects. With some limited exceptions, architect contracts must be in writing, include a written description of the project, and describe the procedure that the architect and the client will use to accommodate additional services and contract changes, including changes in project scope, description of services, or in compensation and method of payment (Bus. & Prof. Code, Section 5536.22(a)). Similarly, the American Institute of Architects (AIA) standard form agreement establishes the architect’s standard role during project construction. The standard form contract includes various clauses that specify how the architect will serve as the initial decision-maker, certify payment applications, and respond to submittals. Owners may also specify whether the architect will work on all phases of the project, or if the scope will be more limited to preconstruction services for example (See AIA Form B101- 2017). Owners should carefully evaluate the need for architects to perform the standard functions on their projects at the time of contracting. Numerous cost-savings opportunities exist during the construction phase. For example, for owners with construction-savvy project managers who may wish to avoid paying additional fees, owners should try not to allow limiting language in the architect contract with regard to the number of project meetings, the number of times that architects will review submittals, or other language limiting the architect’s tasks. However, if
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the architect demands a limited review, limited number of meetings, or other limiting language, the owner should account for those potential additional costs in the construction contract. The construction phase also presents opportunities to facilitate the timely and efficient completion of projects based on the architect’s role. For instance, architects can serve as the initial decision maker when disputes arise between the owner and the contractor as included in AIA’s standard form contract (See AIA Documents A2012017, B101-2017). Additionally, some owners may wish to handle review of payment applications on their own and skip the certification of payment applications by the architect. Thus, these roles can be modified depending on the owner’s goals, experience of the architect and project manager, or other considerations. Importantly, the general conditions in the construction agreements will also need to track with changes to the architect contract’s standard form. As touched on here, there are several opportunities to improve the construction process through specifying the architect’s role during construction. Owners should also work with their counsel to ensure appropriate modifications to the standard form contracts are included in the construction contract documents that are consistent with the parties’ expectations.
Kudos to Attorney Yesenia Z. Carrillo for being named on Business Street's
40 Under 40 list!
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• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •
Winter 2024
Congratulations to LCW Partners Brian Walter and Jennifer Rosner for being chosen as Los Angeles Business Journal’s Leaders of Influence: Labor & Employment Attorneys 2023!
Jennifer Rosner
Brian Walter
Don't Miss Our Upcoming Webinar! How to Customize LCW’s Model Workplace Violence Prevention Plan (“WVPP”) and Implement the Required WVPP Training for Employees
Monday, March 4, 2024 10:00 a.m. - 11:30 a.m. • www.lcwlegal.com •
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Benefits Corner New Student Loan Matching Program Benefit. By: Stephanie J. Lowe There’s a brand new benefit employers may establish beginning in plan years during 2024. Under the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act, employers have the option of making matching employer contributions to certain types of employer-sponsored retirement plans based on employee’s student loan repayments. This includes 457(b) and 403(b) plans. Under this new benefit, as employees pay down their student loans, their employer will provide matching contributions to their retirement plan even if the employee is not making their own retirement contributions. The underlying purpose of these new student loan matching programs is to help employees who have student loan debt and who may not have the financial means to contribute to their retirement plan when they have to prioritize paying down student loans. Before SECURE 2.0 was passed, employers started to ask the Internal Revenue Service whether they could make employer matching contributions to retirement plans for employees who are paying down their student loans as a recruitment and retention tool. SECURE 2.0 now establishes this new benefit. The key requirements for the new student loan matching programs are: • Employer matching contributions must be based on qualified student loan payments (QSLP), which are payments on a qualified higher education loan that was incurred to pay for qualified higher education expenses at an eligible education institution. • A QSLP includes a loan to pay higher education expenses of the employee, the employee’s spouse, or the employee’s dependent. • The employee must provide certification of their student loan payments at least annually. An employer can rely on an employee’s certification. • Even if the employer typically makes matching contributions on an employee’s elective deferrals to a 457(b) or 403(b) plan throughout the year,
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matching contributions based on a student loan matching program are only required to be made once a year. • An employer can only make matching contributions for student loans on behalf of employees who are or would be eligible to receive matching contributions on elective deferrals. • The matching contributions must be made at the same rate as matching contributions on the employee’s own contributions. The matching contributions must also vest in the same way as the employee’s elective deferral contributions. • Matching contributions are limited to the amount of an employee’s student loan payments. • Student loan matching contributions to a 457(b) plan are also limited to the amount of the 457 plan deferral limit ($23,000 for 2024) or the employee’s compensation if less, minus any plan contributions made by the employee for the year. If your nonprofit organizations is interested in learning more about this new benefit, please reach out to us.
Reminder: Flexible Spending Account Dollar Limits For 2024. The employee salary reduction contribution limit for health flexible spending accounts (“Health FSAs”) has increased to $3,200 for 2024 (up from $3,050 from 2023). Health FSA funds are tax-free dollars that may be used to pay medical expenses not covered by other health plans. While $3,200 is the new limit set by the IRS, employers should also review the limits set by their own Section 125 cafeteria plan documents. Some cafeteria plan documents may set a lower limit, or may need to be revised if an employer would like to allow employees to make salary reduction contributions up to the IRS limit as it adjusts on an annual basis. The increase to the 2024 Health FSA contribution limit also means the IRS will permit employees to carry over up to $640 of unused Health FSA funds at the end of a 2024 plan year to the following 2025 plan year. Employers should verify whether they have adopted a carryover option for their Health FSA under their Section 125 cafeteria plan, and if so, should check the maximum amount that may be carried over per the terms of their cafeteria plan document.
• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •
Winter 2024
The maximum amount of DCAP benefits does not change year-to-year and remains at $5,000 (or $2,500 if married filing separately) for 2024.
ACA Compliance Question: Question: If an employee enrolls in a private medical cost sharing plan, will it count as alternative health insurance that meets the Affordable Care Act’s requirements? Answer: No. A medical cost sharing plan helps individuals pay for their medical costs that are not otherwise covered by health insurance, but it does not provide health insurance coverage on its own. It is not going to meet the ACA’s requirements for providing minimum essential coverage. Further, some nonprofit employers offer employees cash in lieu for opting out of employer-sponsored group health insurance. If an employer offers cash in lieu under the terms of an eligible opt out arrangement (which is recommended), then the employee will need to attest that they have alternative minimum essential health coverage for themselves and their entire tax family in order to receive the cash in lieu. Coverage that is not health insurance, such as a medical sharing cost plan, is not minimum essential coverage and will not satisfy the requirements of the eligible opt out arrangement.
new to the Firm! Lucy Goodnough is an Associate in the San Francisco office where she practices in labor and employment law matters.
Whitney Lauren Tolar is an Associate in the San Francisco office, specializing in labor and employment law matters.
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Congratulations to
Brett Overby
for her promotion to Senior Counsel!
The LCW Labor Relations Certification Program is designed for labor relations and human resources professionals who work in public sector agencies. It is designed for both those new to the field as well as experienced practitioners seeking to hone their skills. Participants may take one or all of the classes, in any order. Take all of the classes to earn your certificate and receive 6 hours of HRCI credit per course!
Join our upcoming HRCI Certified - Labor Relations Certification Program Workshops: 1. March 14 & 21, 2024 - Communication Counts! 2. April 4 & 11, 2024 - The Rules of Engagement: Issues, Impacts & Impasse 3. May 16 & 23, 2024 - Nuts & Bolts of Negotiations
Visit our website: www.lcwlegal.com/lrcp 20
• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •
Winter 2024
Did You Know?
Whether you are looking to impress your colleagues or just want to learn more about the law, LCW has your back! Use and share these fun legal facts about various topics in labor and employment law. • A federal district court has entered a permanent injunction barring the State of California from enforcing Assembly Bill (AB) 51, a California law that precludes employers from requiring arbitration agreements as a condition of employment. AB 51 took effect in 2020, and at that time, a preliminary injunction was issued to stop enforcement of AB 51 for arbitration agreements governed by the Federal Arbitration Act (FAA). The FAA is broad—it generally applies to any business involved in interstate commerce, subject to a few exemptions. Now that preliminary injunction is a permanent injunction, meaning that AB 51 cannot be enforced with respect to arbitration agreements governed by the FAA. LCW covered the case on the preliminary injunction, which can be found here. • Los Angeles Freelance Worker Protections Ordinance: The Los Angeles City Council passed the Freelance Worker Protections Ordinance, which took effect on July 1, 2023, and establishes protections for freelance workers within the City of Los Angeles. The Ordinance applies to nonprofit and for-profit entities regularly engaged in business or commercial activity, and defines a “freelance worker” as “an individual natural person, or an entity whose legal and beneficial interests are held entirely and whose work is performed entirely by no more than one individual natural person, hired or engaged as a bona fide independent contractor to perform services for a Hiring Entity in exchange for compensation.” The Ordinance sets forth requirements for the relationship between an entity and a freelance worker for services of at least $600, including certain obligations for written contracts, timely payment, and record retention. It also prohibits retaliation against freelance workers for exercising their rights, permits freelance workers to file a civil lawsuit or administrative complaint if they believe their rights under the Ordinance were violated, and sets forth damages and remedies for violations. More information can be found here: Freelance Worker Protections Ordinance Summary and Freelance Worker Protections Ordinance. • California’s minimum wage will increase to $16 per hour for all employers on January 1, 2024. Some cities and counties in California have local minimum wages that are higher than the state rate. The change in minimum wage also affects the minimum salary an exempt employee must earn to meet one part of the overtime exemption test. Under the new state minimum wage, the minimum salary for exempt employees is $66,560. Please contact LCW with any questions on minimum salary requirements for exempt employees. • The IRS recently updated the process for requesting copies of exempt organization documents. If nonprofit organizations are looking for information on publicly available data on electronically filed Forms 990 and exemption application or determination letters, they should use the Tax Exempt Organization Search (TEOS) tool on IRS.gov. If a copy of these documents is not available on IRS.gov, nonprofit organizations can complete and submit a Form 4506-A to request a copy of the organization’s Form 990s, or a Form 4506-B to request a copy of the organization’s exemption applications or determination letters. • www.lcwlegal.com •
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new to the Firm! Belinda Tommarello, an Associate in the Los Angeles office, provides litigation expertise in labor and employment law matters.
Duncan H. Dohmen, an Associate in the Los Angeles office, provides litigation expertise and employment law advice and counsel on all public agency related matters.
Phil N. Bui, an Associate in the San Francisco office, provides litigation expertise to our public agency clients.
Madeline Cline, an Associate in the San Francisco office, specializes in employment law, labor relations and litigation matters pertaining to public agencies and educational institutions.
Allison Ferraro, an Associate in the San Francisco office, provides employment and labor law expertise to our public agency clients.
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• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •
Winter 2024
Liebert Cassidy Whitmore Named 2024 Best Law Firms® By Best Lawyers!
For more information on some of our upcoming events and trainings, click on the icons:
Consortium
Seminars
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Webinars
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Featured Consortium Calls Members of Liebert Cassidy Whitmore’s consortiums are able to speak directly to an LCW attorney free of charge to answer direct questions not requiring in-depth research, document review, written opinions or ongoing legal matters. Consortium calls run the full gamut of topics, from leaves of absence to employment applications, disability accommodations, construction and facilities issues and more. Each Newsletter, we will feature a Consortium Call, describing an interesting call and how the issue was resolved. All identifiable details will be changed or omitted.
Question:
Answer:
A nonprofit organization saw that there was an update on COVID-19 guidance from the California Department of Public Health (CDPH) and asked LCW how this guidance affects their organization.
The attorney advised that on January 9, 2024, the CDPH issued new guidance on the definitions of “close contact,” “infectious period,” and “outbreak” due to the reduced impacts from COVID-19 compared to previous years. The attorney advised that the new definition of a close contact will vary based on the size of the workplace. The new definition of infectious period for a symptomatic, confirmed case is now considered the day of symptom onset until 24 hours with no fever, without the use of fever-reducing mediations, and where symptoms are mild and improving. For asymptomatic cases, there is no infectious period for the purposes of exclusion or isolation. For nonprofit organizations, this means that employees may be able to return to the workplace sooner depending on their symptoms and fever. Finally, the definition of outbreak changed from at least three cases in a 14-day period, to at least three cases in a seven-day period. This is a substantial reduction that may cause fewer employers to meet the definition of “outbreak,” and therefore may reduce the need for employers to implement outbreak testing and related procedures. LCW covered this new guidance in a recent special bulletin, which can be found here.
A nonprofit organization called asking about how to supplement State Disability for an employee going on maternity leave. Specifically, the organization wanted to avoid a delay in the employee receiving their disability payments, but was mindful that the employee would not receive more than 100% of her pay.
The nonprofit attorney advised the organization that the employee will receive notice from the EDD identifying the amount of her disability payment. Once the employee receives notice of the amount of her disability benefits, she should provide that notice to the employer and request accrued leaves to supplement the difference to pay her 100% of her wages. If the employee receives more than 100% of her wages, she will likely be asked to pay the money back or her disability benefits will be reduced – this depends on what the EDD decides to do.
A nonprofit organization called that an employee was arrested and wanted to know how to respond and was concerned that publicity could harm the nonprofit organization’s reputation.
The nonprofit attorney explained that under California law, a California employer cannot use an employee’s arrest to discipline or terminate an employee. The organization would have to investigate the factual allegations to determine if there is a violation of its policies, and then decide next steps.
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• Los Angeles • San Francisco • Fresno • San Diego • Sacramento •
Winter 2024
Congratulations to our 2024 Southern California Super Lawyers!
Peter Brown
Geoff Sheldon
Scott Tiedemann
new to the Firm! Margarite M. B. Sullivan is an Associate at the San Diego office where she provides advice and counsel in labor and employment law matters.
Tevon F. Edwards is a Labor Relations Consultant in the San Francisco office of where he provides advise and counsel in employment and labor related matters. Tevon also serves as an experienced negotiator.
Allison Berquist is an Associate in the Los Angeles office of where she provides advice and counsel on a variety of issues.
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Liebert Cassidy Whitmore