A number of new laws take effect on January 1, 2020. This alert discusses some of the most important of these for small businesses.
Oregon Corporate Activity Tax
Legislation passed last year adopted a new Corporate Activity Tax (CAT) imposed on all types of businesses, including corporations, partnerships and sole proprietorships. This tax is in addition to the current corporate tax.
CAT is based on the total amount a business realizes from transactions and activity in Oregon. Certain types of receipts are not subject to CAT, and the law allows a 35% subtraction for certain business expenses.
Only taxpayers with more than $1 million of taxable Oregon commercial activity will owe the tax, but a business must register with the Oregon Department of Revenue within 30 days of the date it exceeds the $750,000 registration threshold.
Revenue from CAT will be transferred to the newly created Fund for Student Success, which will be used for education purposes.
Unfortunately, many of the details of this new tax have not yet been worked out, but you can sign up online to receive updates.
Oregon Pregnancy Accommodations
All Oregon employers with at least six employees will be required to provide reasonable accommodations to employees and applicants with work limitations relating to pregnancy, childbirth or related medical conditions, including lactation.
The statute gives four examples of reasonable accommodations: acquisition or modification of equipment or devices; more frequent or longer break periods or periodic rest; assistance with manual labor; and modification of work schedules or job assignments.
In addition to providing reasonable accommodation, employers must provide written notification of the Employer Accommodation for Pregnancy Act to each new hire at the time of hire, pre-existing employees within 180 days of the Act’s effective date (i.e., by June 29, 2020), and any employee who notifies the employer of a pregnancy within 10 days.
Each covered employer must also post a notification in a conspicuous and accessible location on its premises.
Oregon Protection Against Identity Theft
SB 684 updates and modifies Oregon’s Consumer Identity Theft Protection Act. Among the bill’s major provisions is a new requirement that a vendor must notify a covered entity as soon as possible, but no more than ten days after discovering a data breach.
Further, the bill requires a vendor to notify the Attorney General if the breach involves personal information of more than 250 consumers, or if the vender cannot determine the number of consumers involved.
The bill defines a “covered entity” as one that “licenses, maintains, stores, manages, collects, processes, acquires or otherwise possesses personal information in the course of the person’s business, vocation, occupation or volunteer activities.”
A “vendor” is defined as “a person with which a covered entity contracts to maintain, store, manage, process or otherwise access personal information for the purpose of, or in connection with, providing services to or on behalf of the covered entity.”
Oregon Noncompetition Agreements
HB 2992 requires employers to provide each employee with a signed, written copy of the terms of their noncompetition agreement within 30 days after the termination of employment. At this time, it is unclear whether a copy provided on the employee’s last day would be considered to comply with this requirement.
This new rule, which applies to all noncompetition agreements entered into on or after January 1, 2020, is in addition to a number of other strict requirements relating to noncompetition agreements in Oregon.
Washington Noncompetition Agreements
Noncompetition agreements will be void in the state of Washington for employees whose W-2 earnings from the employer attempting to enforce the agreement are less than $100,000 annually.
Further, the employer must disclose the terms of the covenant in writing to the prospective employee no later than acceptance of the offer of employment. If the agreement becomes enforceable only at a later date due to changes in the employee’s compensation, the employer must specifically disclose that the agreement may be enforceable against the employee in the future.
A noncompete covenant entered into after the employment begins is void unless the employer provides independent consideration for that covenant.
The new law will also prohibit enforcement of noncompetition agreements against independent contractors whose 1099-MISC earnings from the party seeking to enforce the noncompete is less than $250,000 per year.
If an agreement is found to violate the new law, or if the court has to modify any part of the agreement to make it “reasonable,” then the employer will be required to pay the greater of the employee’s actual damages or $5,000, plus the employee’s attorneys’ fee, expenses and costs.
Noncompete agreements that last longer than 18 months will be presumed to be unreasonable. For performers in the entertainment industry, anything over three days is presumed unreasonable.
If an employee is laid off, an otherwise valid covenant not to compete will be void unless the employee is paid compensation equivalent to the employee’s base salary at the time of termination for the period of enforcement minus all compensation earned through subsequent employment.
Federal Overtime Rules
New overtime rules developed by the US Department of Labor (DOL) are scheduled to go into effect on January 1, 2020.
Employees are excluded from overtime protection if they are salaried, earn at least a specified amount and primarily perform duties considered executive, administrative or professional by the DOL.
Currently, the salary must be at least $455 weekly ($23,660 per year). The new rules raise the pay threshold for overtime protections to $684 per week ($35,568 per year).
Employers are now allowed to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10% of the standard salary level.
The current DOL rules also provide that certain highly compensated employees are excluded from overtime requirements, so long as their primary duties include performing office or non-manual work and they customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.
This exemption remains in effect under the new rules, though the minimum highly compensated salary will increase from $100,000 to $107,432 per year.
Individual jurisdictions (states, counties or cities) may have more stringent requirements for classification of a worker as exempt, so it’s important to verify which standard applies to your situation.
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Please feel free to contact us if you have any questions about these new laws.
Photo by Sharon McCutcheon on Unsplash
