​· California enacted Assembly Bill 203 in 2019, and goes into effect in 2020.
· AB203 requires Valley Fever training for all potentially exposed employees in certain counties.
· The training needs to be conducted annually.
· The training requirement can be met with a video, if it covers a designated list of topics.
· Arthur & Hansen developed and produced this video covering the topics that are needed to meet compliance.
· Rather than charge to conduct the training in-person for companies, Arthur & Hansen has provided the training video below to our industry AT NO COST! Just show it at your next safety tailgate!

Another year has ended, and environmental law firms working for trade unions are busier than ever trying to cut competition from you and increase costs of construction.

They’re using the state’s environmental law - the California Environmental Quality Act (CEQA) - as grounds to object to permits and approval of proposed construction projects.

Once the developer agrees to a Project Labor Agreement or some other deal with unions, the environmental objections are resolved and The Planet Is Saved, again. Praise Gaia.

By the way, this is how the "Green New Deal" you are now reading about in the news will be implemented in California - not with laws, but with extortion.

Law firms hired by the unions deliberately submit documents to governments at the very last minute (to maximize cost, time, and stress for the developer). It’s difficult for the public to track this practice.

Fortunately, there are experts in this business, supported by people like you: Us.

The Coalition for Fair Employment in Construction is constantly tracking union “greenmail” - blackmail using environmental laws. We have identified, extracted, processed, uploaded, and complied with more than 500 examples of such documents submitted on behalf of unions since 2014. And we provide the list to the public. Thanks to our efforts two separate lawsuits are now suing the unions over their greenmail with a good chance of being successful!

Thanks to the chart we created, no one - not the unions, not the news media, not even Governor Gavin Newsom - can claim that unions aren’t abusing the state’s environmental laws to obtain Project Labor Agreements. This means a great deal in these court cases.

You can see this incredible, one-of-a-kind list at our Phony Union Tree Huggers website: DOCUMENTED CONSTRUCTION UNION ABUSE OF CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) 2014-2019

Now we’re gearing up for another year of union harassment. Will you help us with some funding to maintain and grow this chart of abuse? A donation today will help us maintain our ability to fight all of this and to help win those court cases!

You can use a credit card HERE and help us right now! Or, should you prefer, you can send a check to CFEC at P.O. Box 1627 Poway, CA. 92074. Either way it will make a difference.

Here's to a wonderful New Year, a year where we finally put an end to environmental extortion.

Eric Christen

Executive Director

CFEC

The Affordable Care Act (ACA) has changed many things for employers, employees, and the health insurance industry. One of the ACA provisions relates to the amount insurers must spend on health care and improving health care quality from each premium dollar received. It’s what called the Medical Loss Ratio or MLR.


Individual and Small Group MLRUnder the ACA, insurers must spend at least 80% of their premium income from Individual and Family Plan (IFP) and Small Group policies on health care claims and quality improvements. The remaining 20% can go toward insurance company expenses like administration, marketing, and profits.


Large Group MLRFor Large Group plans, health insurers must spend at least 85% of premium dollars on health care and quality improvements.


Self-Funded PlansThe MLR provision of the ACA applies to all types of licensed health insurers, Blue Cross and Blue Shield plans, and health maintenance organizations (HMOs); however, it does not apply to self-funded plans where the employer or another plan sponsor pays the cost of health benefits from its own assets. Nor does it apply to a self-funded plan administered by an insurer on behalf of an employer.


MLR RefundsSince 2012, an insurance company not meeting the established ACA MLR standard has been required to issue a refund. Annually, it must provide notice to enrollees of any rebates they will receive or that will be paid to their employer.
According to the Kaiser Family Foundation (KFF), a non-profit organization not affiliated with Kaiser Permanente health plans, according to data released by the Centers for Medicare & Medicaid Services (CMS), more than $1.3 billion in refunds for 2018 will be issued across all markets in 2019. This amount exceeds the previous refund record of $1.1 billion for 2011 (paid in 2012).
According to KFF, the 2019 MLR figures includes $312 million to Small Group insureds and $284 million for Large Group insureds paid to 289,000 employers. The remaining $743.3 million in rebates is being distributed to 2,748,000 individual subscribers. Rebates can be paid out as a lump-sum or as a premium credit for those currently enrolled with their same insurer (if their coverage is in force at the time of the refund payment).
Rebates vary by state and market. In the California Small Group market, $78 million in refunds are being paid out. Data for Nevada was not included in the KFF analysis.
Employers have several options when it comes to dispersing MLR amounts, and they have 90 days to take action after reimbursements are paid (the ACA requires distributions by insurers no later than September 30).
There are three options provided by the Department of Labor for distributing MLR rebates:

1. Reduce subscribers’ portions of the annual premium for the subsequent policy year for all subscribers covered under any group health policy offered by the plan.
2. Reduce subscribers’ portions of the annual premium for the subsequent policy year for only those subscribers covered by the health policy on which the rebate is based.
3. Provide a cash refund only to subscribers who were covered under the group health policy on which the rebate is based.

The ACA does not require employers to track down former employees to whom MLR rebates may be due; however, COBRA participants must be included in any premium rebates, if applicable.
If a health plan is solely funded by the employer, then the employer may keep the rebate check – so long as the funds are not considered “plan assets” under ERISA law. If refunded amounts are considered “plan assets,” the funds must be used to enhance employees’ benefits.

December 4, 2019 by Paul Roberts
The closing of the calendar year – and beginning of a new one – brings annual compliance responsibilities to employers regarding their health plans. It is imperative for such employers to adhere to these responsibilities because a miscalculation, a missed deadline, or an overlooked compliance item can result in significant non-compliance penalties. Here’s what you need to know as we sunset 2019 and welcome a prosperous 2020 new year.
Affordable Care Act (ACA):  Applicable Large Employer (ALE) Determination
Each employer must determine whether it is considered an Applicable Large Employer (ALE) according to the ACA. If an employer is an ALE, it is subject to the ACA’s shared responsibility “employer mandate.” Under the mandate, ALEs must offer all eligible Full Time (FT) employees at least Minimum Essential Coverage (MEC) that is affordable and meets a “Minimum Value” standard, which is a Bronze tier (or better) health plan. ALEs must also offer at least MEC to those FT employees’ dependents.
To determine whether an employer is an ALE, the employer must calculate its workforce size on January 1st annually, by averaging its workforce count for all 12 months of the preceding tax year. This means, for each month of 2019, the employer should count all its FT employees and its Full Time Equivalent (FTE) employees, then average those results to get its final workforce size. If the group size averages 50 or more FT + FTE, it is an ALE – and it must comply with the employer mandate in 2020 and related reporting responsibilities in 2021. If it has fewer than 50 FT + FTE employees, it is not an ALE and is not mandated to offer health coverage in 2020 or report offers of coverage to the IRS.
An employer’s result will remain in place for the entire calendar year going forward, regardless of fluctuations in size. January 1st is the only time an employer’s ALE status can change.
The ACA considers an employee to be FT if he or she averages at least 30 hours of service per week or 130 hours of service per month. FTEs are fractions of FT employees who, when totaled together, equal the equivalent of one FT employee. To calculate FTE count, total the part-time employees’ hours of service for each month (using a maximum of 120 hours for each PT employee, even if he or she averaged 121-129 hours of service), and divide each month’s total by 120.
Refer to Word & Brown’s exclusive ACA Group Size Calculator and FTE Calculator for California employers and for Nevada employers for help making this determination.
ACA: Reporting Responsibilities
If the employer determined on January 1, 2019, that it is an ALE for all of 2019, it must also report on the coverage it offered (or did not offer) to any person employed FT for one full calendar month of 2019.  Employers usually complete this reporting during December or January using IRS Forms 1095 and 1094.
Copies of IRS Form 1095 are due to employees on or before March 2, 2020, which is a 30-day extension (announced 12/2/2019) of the former January 30, 2020, deadline. IRS Forms 1095 are due to the IRS on or before the end of February if submitting by paper, or the end of March if submitting electronically.
Note: The IRS may postpone more of these dates, but employers should not assume date changes until officially announced by the IRS. Refer to Word & Brown’s exclusive IRS Reporting Deadlines chart for details on form submission deadlines, and refer to Word & Brown’s exclusive Employer Reporting Penalties reference sheet for details on reporting non-compliance penalties.
Word & Brown annually hosts a series of webinars for brokers and employers on ACA reporting to the IRS. Please join us for the ACA IRS Reporting Webinar Series: Don’t Fear the Forms! scheduled in December 2019 and January 2020.
COBRA Group Size Calculation
Employers must also determine COBRA responsibilities annually on January 1st, by evaluating workforce size under COBRA law. Unfortunately, it is a different (yet similar) calculation than the ACA’s ALE count.
Employers that have employed at least 20 employees on 50% or more of the typical working days in 2019 are subject to federal COBRA law for all of 2020 if they sponsor a group health plan(s).
Employers domiciled in California, with California group health plan(s), that have employed fewer than 20 employees on 50% or more of the typical working days in 2019 are subject to Cal-COBRA law for all of 2020.
In Nevada, there is no state COBRA continuation; employers with fewer than 20 employees are not subject to COBRA law in Nevada. Federal COBRA law, however, applies in all states.
When making the COBRA determination, both full-time (FT) and part-time (PT) employees are counted. Each PT employee counts as a fraction of a FT employee. To calculate PTs as FTEs in COBRA, the employer should total all PT employees’ hours of service and divide it by whatever the organization considers to be full-time.
Different benefits and administrative billing charges/fees on premiums are associated with federal COBRA and Cal-COBRA, so it is very important for the employer to make the determination accurately at the beginning of the year. An employer must generally notify its carriers and applicable COBRA Third Party Administrators (TPAs) of any changes to COBRA status as soon as the determination has been made.
Just like the ACA calculation, the employer remains in its COBRA category for the entire calendar year – regardless of future fluctuations in workforce size.
IRS Controlled Groups
If an employer has ownership in multiple businesses, its employees can be combined for purposes of determining group size – even if the businesses have separate tax IDs and are otherwise not related.
It is critical for a tax professional to make this determination for employers in accordance with IRC Section 414, subparagraphs (b), (c), (m), and (o).
California’s New Individual Mandate
California is implementing a new health insurance individual mandate effective 1/1/2020. It requires all Californians to carry Minimum Essential Coverage (MEC) for the tax year, or be subject to a tax-penalty fine. Refer to our previous column for a deep dive into the new state mandate, to understand what it means for employers and their employees – California’s Individual Mandate 2020: What You Need to Know.
Booming Success in 2020 and Beyond
Word & Brown partners with you throughout the year to ensure your success. Stay tuned for more information on the ACA, IRS Reporting, COBRA, the California Individual Mandate, and more. For extra help with employer group size determinations, refer to the Word & Brown exclusive employee count reference.

More about the author:Paul Roberts is our Compliance Manager, leading the General Agency’s educational initiatives and providing support for the compliance team in California and Nevada. Paul is a tenured veteran in the health insurance industry, carrying a long history of health insurance experience and an education in business management. He has performed nearly every operational role at Word & Brown General Agency, and has a fervor for education and keeping health insurance brokers and employers in-line with compliance. Paul can be found at many industry events across the nation delivering CE, HRCI & SHRM courses, educating himself, advocating for the role of the agent, and working directly with brokers and employers. This gives Paul the best ability to innovate and improve compliance resources & education curriculums to support the businesses and abilities of brokers. Paul is passionate about education, diversity and helping others. He is grateful for his opportunity to support both brokers and employers and is committed to your success.

The share of workers quitting jobs hit a post-Great-Recession high in 2019, reports
the Bureau of Labor Statistics, challenging employers even further in this era of low
unemployment and competition for qualified workers. Construction companies
large and small are flush with projects. Yet, their ability to fulfill those projects could
be jeopardized by the realities of today’s labor market, in which workers are in such
high demand that both candidates and current employees are being actively
targeted by job recruiters. 
And, according to the ADP Workforce Vitality Index, the industry suffers from an
average turnover rate of 21.4%. For business owners, this has sparked an increased
interest in strategies to reduce attrition, rehiring and retraining costs, and to create
long-term workforce stability. 

Reducing Turnover

Most employers are keenly aware of the need to pay competitive wages and,
therefore, include it in their projected costs. But it doesn’t stop there. They’re also
strategizing ways to improve the employee experience and create a positive work
environment. 
An October 2019 report, “Workplace Satisfaction Report: What Workers Want—And
What Doesn’t Matter,” revealed that there is often a disconnect between what
employees want in their jobs and how often they experience those benefits. In short,
there is no one-size-fits-all approach, and the best way to find out what motivates
employees in the workplace is to start a conversation.
You need to specifically ask your employees, “What’s most important to you?” For
one employee, it might be more flexible hours. For another, it might be additional
time off. And for a third, it might even be the opportunity to lead a new initiative or
be considered for more responsibilities. Providing benefits that employees want but
don’t necessarily expect allows employers to deliver benefits that make a real
impact on employee engagement.

What Workers Want

As part of the survey, skilled trades workers were asked what factors they prioritize
in the workplace. The top responses were: opportunities for growth and
advancement, business practices in line with personal values, opportunities to gain
marketable skills, recognition for their work and job security. These factors aren’t
just valuable for the skilled trades, but for all employees. Keep them in mind as you
consider the following components for inclusion in your retention strategy. 

1. Prioritized Onboarding 
One company I work with sends each new hire an onboarding package that includes
a letter from the supervisor, as well as a hard hat, t-shirt, safety vest and short bios
about all the people they will meet during their first day. It’s a great strategy for
kickstarting a feeling of belonging for new employees. Effective retention of top
employees begins even before an employee’s first day on the job. Successful
onboarding strategies include:Consistent communication—Making contact with
candidates between the time an offer is made and their scheduled start date is
crucial to the onboarding process.

• Clearly defined job expectations—Be sure to document expected duties and set 30-, 60- and 90-day goals. New          employees should have access to all the information they need and managers who can answer questions.
• Regular check-ins—Schedule a meeting with new hires on their first day, first

week and first month to answer questions and mitigate concerns.

2. Culture of communication
Your employee value proposition (EVP) isn’t just for attracting talent; it also helps
retain workers by defining what your company (and current employees) stand for.
When creating an EVP, be sure to:

• Make sure your EVP is an honest statement of your culture, workplace and brand. 
• Establish trust by following through on the values articulated in your EVP.
• Consistently look for new ways to demonstrate your EVP.

3. Consistent Feedback
Ensuring that employees feel productive, invested and appreciated will make them
more likely to say no to other job offers and choose to stay on your team. You can
offer your employees this security by:

• Offering frequent performance conversations and in-the-moment feedback,

which create better work habits for all employees

• Normalizing regular communication about what “good work” looks like for

specific tasks and how employees can get there, which makes the process of
correcting mistakes more palatable

• Offering consistent feedback to reduce the opportunity for

misunderstandings and clarify what is good behavior and what falls short;
keep in mind that high-performing employees might interpret a lack of
feedback as a lack of appreciation for their good work

4. Opportunities for Growth 

Even satisfied employees are often looking ahead to the next chapter. Take
advantage of their strengths to help them succeed.

• Make sure you’re challenging your workers and allowing them to develop

skills that will help them contribute more and advance in the company. 

• Create opportunities for employees to grow within your organization rather

than making them feel they have to move out to move up.

• Make workforce development a top priority—it’s an investment that pays.

5. Upskilling 
Upskilling, or training and advancement practices that help workers learn new skills
and take on new responsibilities, is being used more frequently to keep workers on
top of their game. Consider these best practices:

• Identify and address your company’s skills gaps.
• Pinpoint high-performing workers and ask what training or certifications will

help them achieve their future goals.

• Consider the impact of mentorships and other opportunities that cultivate a

leadership mindset.
Today’s labor market is already challenging, and workers are setting the terms of
their employment. To make a real difference, companies need to know why workers
quit and understand how to create a work environment that makes them want to
stay. 

Parke Jacquay is the director of business development, energy and construction at
Aerotek, a provider of recruiting and staffing services. Headquartered in Hanover,
Maryland, Aerotek operates a network of over 250 nonfranchised offices with more
than 8,000 internal employees. Visit aerotek.com.

News Release
WASHINGTON, DC – Today the U.S. Department of Labor announced a final rule to make 1.3 million American workers eligible for overtime pay under the Fair Labor Standards Act (FLSA).
"For the first time in over 15 years, America's workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans," Acting U.S. Secretary of Labor Patrick Pizzella said. "This rule brings a commonsense approach that offers consistency and certainty for employers as well as clarity and prosperity for American workers."
"Today's rule is a thoughtful product informed by public comment, listening sessions, and long-standing calculations," Wage and Hour Division Administrator Cheryl Stanton remarked. "The Wage and Hour Division now turns to help employers comply and ensure that workers will be receiving their overtime pay."
The final rule updates the earnings thresholds necessary to exempt executive, administrative, or professional employees from the FLSA's minimum wage and overtime pay requirements, and allows employers to count a portion of certain bonuses (and commissions) towards meeting the salary level. The new thresholds account for growth in employee earnings since the currently enforced thresholds were set in 2004. In the final rule, the Department is:

• raising the "standard salary level" from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker);
• raising the total annual compensation level for "highly compensated employees (HCE)" from the currently-enforced level of $100,000 to $107,432 per year;
• allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices; and
• revising the special salary levels for workers in U.S. territories and in the motion picture industry.

The final rule will be effective on January 1, 2020.
The increases to the salary thresholds are long overdue in light of wage and salary growth since 2004. Nearly every person who commented on the Department's 2017 Request for Information, participated at listening sessions in 2018 regarding the regulations, or commented on the Notice of Proposed Rulemaking agreed that the thresholds needed to be updated for this reason.
The Department estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase to the standard salary level. The Department also estimates that an additional 101,800 workers will be entitled to overtime pay as a result of the increase to the HCE compensation level.
A 2016 final rule to change the overtime thresholds was enjoined by the U.S. District Court for the Eastern District of Texas on November 22, 2016, and was subsequently invalidated by that court. As of November 6, 2017, the U.S. Court of Appeals for the Fifth Circuit has held the appeal in abeyance pending further rulemaking regarding a revised salary threshold. As the 2016 final rule was invalidated, the Department has consistently enforced the 2004 level throughout the last 15 years.
More information about the final rule is available at https://www.dol.gov/whd/overtime2019/.
The Wage and Hour Division's (WHD) mission is to promote and achieve compliance with labor standards to protect and enhance the welfare of the Nation's workforce. WHD enforces Federal minimum wage, overtime pay, recordkeeping, and child labor requirements of the FLSA. WHD also enforces the Migrant and Seasonal Agricultural Worker Protection Act, the Employee Polygraph Protection Act, the Family and Medical Leave Act, wage garnishment provisions of the Consumer Credit Protection Act, and a number of employment standards and worker protections as provided in several immigration related statutes. Additionally, WHD administers and enforces the prevailing wage requirements of the Davis Bacon Act and the Service Contract Act and other statutes applicable to Federal contracts for construction and for the provision of goods and services.
The mission of the Department of Labor is to foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.

Agency
Wage and Hour Division
Date
September 24, 2019
Release Number
19-1715-NAT
Contact: Emily Weeks
Phone Number
202-693-4681
Email
[email protected]

Everything you need to know about qualifying, applying, contracts & stipulations
by Vernon Howerton
October 21, 2019
One of the most discussed and misunderstood areas of the construction industry is the disadvantaged business enterprises (DBE) program. For those who already participate in the program or wish to own and operate a certified DBE, it is critical to know the history and rules of the system. 
Conceived in the 1980s, the DBE program was originally a 10% set-aside (quota) for participation by minority- and woman-owned businesses in federally funded, transportation-related construction projects. The program was intended as a means to remedy past discrimination against women and minorities in the construction industry. 
Under the old program, a contractor bidding a $10 million highway project needed to demonstrate $1 million of DBE participation for their bid to be considered responsive. But President Clinton and the Supreme Court changed the game in the late 1990s after Adarand Constructors, a guardrail contractor, submitted the lowest subcontract bid for guardrail on a Colorado highway construction project, but a higher bid was submitted by a DBE subcontractor. The prime took the high bid over the low to meet its quota for DBE participation.
Adarand sued and ultimately won in the Supreme Court. In Adarand Constructors Inc. v. Peña, 515 U.S. 200 (1995), the court found the program unconstitutional as then implemented. The United States Department of Transportation (USDOT) then amended the DBE program under the auspices of “mend, not end,” thereby creating the precursor to the current DBE regulations.
Qualifying as a DBEMost DBE programs, though implemented by the states via “uniform certification programs,” are based on the USDOT’s DBE regulations. They can be found in 49 CFR Part 26 at ecfr.gov. To qualify as a DBE, the firm must be at least 51% “owned” and “controlled” by one or more “socially” and “economically” disadvantaged individuals.


Ownership & ControlOwnership and control must be real and substantial. Typically, the disadvantaged owner must hold the highest position in the company—president or chief executive officer—and have the ability to control the day-to-day affairs of the business. As a result, generally, the company’s bylaws or agreements cannot provide for supermajority voting on issues, such as borrowing money, purchasing equipment, signing leases and the like. 
The disadvantaged owner of 51% of a business cannot and should not agree to a requirement for a 60% majority vote to take certain actions where the 51% ownership is the basis for the DBE certification. On the other hand, if two women each own 30% of a business and each is considered socially and economically disadvantaged, it is acceptable to have a 60% majority requirement for certain transactions. 
Social & Economic DisadvantageWomen and minorities are rebuttably presumed to be socially disadvantaged. Economic disadvantage is generally based on the owner’s net worth, exclusive of the owner’s interest in their primary residence and the value of their interest in the firm that is seeking certification. And the certifying authority must determine disadvantaged status based on the “totality of the circumstances.” 
Small Business To be certified as a DBE, the firm must also be “small,” based on either its number of employees or total sales in its primary area of business. Size standards are set and published by the Small Business Administration (SBA) based on the North American Industry Classification System (NAICS) code for the firm’s primary area of business. 
When the same individuals own or have the ability to control multiple firms, the firms are considered “affiliates,” and the total employees/sales are aggregated for purposes of the size determination. Firms that have grown too large to be certified as a DBE can still be certified as woman- or minority-owned.
​Keep in Mind When creating a company that is intended to be certified as a DBE, there are numerous other considerations. For example, the disadvantaged owner must acquire their interest for its value to count (e.g., a husband cannot gift his wife or superintendent 51% of a business, then have it certified). Even where the disadvantaged owner’s interest is acquired in exchange for lending their “expertise” to the business, the owner must have a significant financial investment.
In community property states, care must be taken to not acquire the disadvantaged owner’s interest in the business with community property. However, a spouse can legally disclaim any interest in the business as community property. A DBE firm must be independent and not disproportionately dependent on another non-DBE firm. In other words, a heavy highway contractor bidding on public work cannot set up captive DBE subcontractors.
Project DBE goals are no longer considered quotas. Rather, when a project has a DBE “goal,” prime contractors bidding on the work must make “good faith efforts” to attain it. If the low bidder can demonstrate good faith efforts through records of advertising, solicitation of DBE bids, outreach and other means listed in the regulations, the project can still be awarded, even where the low bidder did not achieve the DBE participation goal.
Although there is some wiggle room for awarding authorities, prime contractors are no longer required to award a subcontract to a DBE firm just to meet the goal, if the DBE firm’s quote is unreasonably high in comparison to other bidders’ quotes. DBE contractors are still required to perform a “commercially useful function.” This means the DBE firm must contribute value to the project (i.e., you can’t just award a $1 million contract to a DBE who does nothing except be counted as a subcontractor.)
Deep Into the DetailsPeople who break the rules can go to jail or be fined when they are caught. Anyone who does not believe this should visit the USDOT Office of the Inspector General website (oig.dot.gov) and type “DBE” into the search bar. You will find pages of press releases concerning indictments, prosecutions and fines. 
As recently as Feb. 6, 2019, the U.S. Department of Justice (DOJ) announced a settlement related to DBE fraud. “Contractor A,” as we’ll call them, had graduated from the SBA’s 8(a) DBE program and used Contractor B, an allegedly related 8(a) DBE firm, to pursue business. According to the press release, Contractor B used Contractor A’s “bonding, office space, employees, contractors, software, computers and vehicles.” And Contractor A made high-level decisions and managed the day-to-day operations of Contractor B. 
The DOJ alleged Contractor B lacked “control” of its own operations, and the arrangement was intended to defraud the government. The two contractors agreed to pay the government $3.6 million to settle the case.
DBE fraudsters may also find they are subject to suspension or debarment from bidding and receiving new work from governmental entities, as well as subject to civil penalties under the False Claims Act or similar state laws. A good rule of thumb is not to do anything that will potentially put you in jail or ruin your existing business. 
Bottom line: Seek legal counsel from an experienced attorney and trust them if they simply say, “No, don’t apply.”  

ABOUT THE AUTHORVernon Howerton is a construction law attorney at Gray Reed in Dallas, Texas. He has more than 25 years of experience helping businesses avoid and resolve commercial disputes through negotiation, alternative dispute resolution and litigation, with an emphasis on construction and government contract law. Howerton also has significant experience negotiating and documenting construction contracts and advising clients on the risks associated with various transactions. Contact Howerton at [email protected]. Visit grayreed.com. 

The financial, management, market differentiation & process changes that will prevent total doom
by Gregg M. Schoppman
October 25, 2019
When is the downturn coming? It’s the million-dollar question causing consternation in construction company boardrooms. Whether the next downturn is a depression, recession or simple market correction, there will be ripples experienced across all industries, but perhaps none more than construction.
Undoubtedly, the damage from the last recession is burned indelibly in every leader’s mind, causing varying levels of anxiety. However, it shouldn’t take an economic correction to prompt businesses to shape up. Financial and workforce management, market differentiation and process adherence are surefire ways to absorb any impact and maintain a healthy business.
Financial ManagementIf the Great Recession taught businesses anything, it was the importance of superior financial management, particularly cash flow and collections. Accounts receivable are only good if they generate cash flow in a timely manner. Top firms have a keen eye for collections and adopt a disciplined process for handling risk-prone accounts and customers who slip in the murky waters of 60-days past due.
Additionally, top contractors ensure their cash management through a healthy working capital and ethical, positive overbillings value. This does not mean they lose all semblance of customer service and strong-arm customers, but rather, proactively monitor customer behaviors and ensure managers are doing their jobs. Great leaders should routinely ask themselves:

• What is the age of our average accounts receivable invoice?
• What month-to-month trend do we use to measure client payment reliability?
• Are we cash-flow positive or serving as a no-interest, low-risk lender for customers and clients?

People ManagementAnother lesson from the Great Recession was that talent development waits for no market. Many organizations decided against investing time or money in talent development, even culling team members who no longer made sense. Employee reductions came about as a necessity, rather than as a routine part of doing business. Additionally, many companies paused training and development because budgets didn’t allow for it, and that focus was better applied to work that kept the lights on. 
Many business owners and key leaders, now a decade older and wiser, wonder if this pause in training may have stunted the growth of their teams long term. It’s important to decide for your business what resources should be cut in order to stave off mediocrity, and what resources should be developed and cultivated no matter what. Some key questions worthy of reflection on this topic include:

• Do we hold people accountable?
• Are we developing at all levels?
• What skill gaps exist?
• Who are our top performers, and why?
• Who composes our middle tier, and do they regularly receive feedback to improve their performance?

Market DifferentiationIf your biggest client left you tomorrow, what would you do? Don’t panic yet, but many firms experienced this real concern when the economic collapse occurred, leaving them stranded. 
First, it is important to constantly examine the current workload and the quality of the future backlog. Examining a rolling, 12-month backlog projection is one way to provide an illustration of what the future holds. Then consider the actions required when specific triggers are hit.
For instance, if your firm’s backlog 6 months from now is projecting a 12% dip, what steps must you take to hedge against the repercussions? Simply looking at projected billings 30 days out is too myopic and barely provides enough reaction time. 
Secondly, a firm can examine peaks and valleys in its backlog relative to market niches or sectors. Private/public, commercial/government, hard-bid/negotiated, etc., are all tranches that provide insight and validation to forecasts. As with any projection, there is some level of variability or uncertainty. Handicapping longer-range targets is one approach.



For example, if a strong client has on average 10 opportunities per year and the firm usually wins 50% of those bids, a conservative estimate might project a future backlog of three potential projects for an approximate revenue stream. Questions to consider here include:

• What would happen to our business if our largest account or source of revenue dropped by 50%?
• What group or individual in our firm is seeking new markets and customers?
• What tools or indicators provide the clearest view into our next 12 months?
• If we can’t predict our revenue stream, how are we ensuring we don’t have to live hand-to-mouth?

Process AdherenceSticking with a set of operational best practices serves a firm well, both when times are challenging and when times are good. Posterity measures along with massive behavioral change create a certain level of organizational inertia that is difficult to overcome, making hunkering down during an economic downturn even harder to apply and enforce. 
Performance should be routinely evaluated, and internal processes measured to ensure there is one defined way to do things, and it’s the only way accepted. Ponder the following questions to ensure the processes and tools are the right ones used.

• Do we measure efforts like pre-construction planning and closeout planning and provide routine feedback on that process adherence?
• How many different versions of a meeting agenda exist within the firm?
• What is included in the recipe for a successful project, step by step?
• How well do we do at finishing projects expeditiously and profitably?
• Is our current operational model working, or are our processes fractured by too many new ideas?
• Is our current operational model germane to the new business we are doing?

ABOUT THE AUTHORGregg M. Schoppman is a consultant with FMI Corporation, management consultants and investment bankers for the construction industry. Schoppman specializes in the areas of productivity and project management. He also leads FMI’s project management consulting practice. Prior to joining FMI, Schoppman served as a senior project manager for a general contracting firm in central Florida. He has completed complex construction projects in the medical, pharmaceutical, office, heavy civil, industrial, manufacturing and multifamily markets. He holds a bachelor’s degree and master’s degree in civil engineering, as well as a Master’s of Business Administration. Schoppman has expertise in numerous contract delivery methods, as well as knowledge of many geographical markets. Visit fminet.com or contact Schoppman by email at [email protected].

October 18, 2019 From https://www.ftb.ca.gov/about-ftb/newsroom/news-articles/health-care-mandate.html?WT.ac=Healthcare
The State of California is working to reduce the number of uninsured families with the adoption of a new state individual health care mandate.
Here are three things California residents need to know:
1. Make sure you have health coverageThe mandate, which takes effect on Jan. 1, 2020, requires Californians to have qualifying health insurance coverage throughout the year.
Many people already have qualifying health insurance coverage, including employer-sponsored plans, coverage purchased through Covered California or directly from insurers, Medicare, and most Medicaid plans.
Under the new mandate, those who fail to maintain qualifying health insurance coverage could face a financial penalty unless they qualify for an exemption.
Generally speaking, a taxpayer who fails to secure coverage will be subject to a penalty of $695 when they file their 2020 state income tax return in 2021. The penalty for a dependent child is half of what it would be for an adult.
The penalty is based on your income and the number of people in your household.
Summary of possible penaltiesHousehold Size If You Make Less Than you May Pay
Individual              $45, 500          $695
Married Couple    $91,000           $1,390
Family of 4             $140,200        $2,085

​To avoid a penalty, California residents need to have qualifying health insurance for themselves, their spouse or domestic partner, and their dependents for each month beginning on Jan. 1, 2020.
The open enrollment period to sign up for health care coverage through Covered California is scheduled for Oct. 15, 2019 through Jan. 31, 2020.

2. Exemptions availableThere are exemptions to the penalty, and families will not have to pay a penalty if the cost of their health care coverage exceeds a certain percentage of their income.

Most exemptions from the mandate will be claimed when filing 2020 state income tax returns in early 2021. Additional exemptions from the mandate will be granted through Covered California beginning in January 2020.

ExemptionsExemptions Claimed on Tax Return                                 

• Income is below the tax filing threshold
• Health coverage is considered unaffordable
• Families’ self-only coverage combined cost is unaffordable
• Short coverage gap of 3 months or less
• Certain non-citizens who are not lawfully present
• Citizens living abroad/residents of another state
• Health care sharing ministry
• American Indian/Alaska Native
• Incarceration (other than incarceration pending the disposition of charges)
• Enrolled in limited or restricted-scope Medi-Cal or other coverage from the California Department of Health Care Service

 Exemptions Processed by Covered California

• Religious conscience exemption
• Affordability hardship
• General hardships

3. Financial assistance availableTo help Californians meet the requirement to have insurance coverage, the state will provide financial assistance to qualifying individuals and families, dependent on their household size and income, through Covered California. This new state financial assistance will be in addition to federal financial assistance some already receive through Covered California.
Options for no-and low-cost coverage are also available through the Medi-Cal program.

To find out more about health insurance options and financial assistance, visit CoveredCA.com.
We want to hear from employers, tax pros, tax software providers and insurersThe Franchise Tax Board and Covered California are working together to implement the new state individual health care mandate.

Employers, tax professionals, software services providers (tax, payroll, other), payroll companies, and insurers are invited to attend a stakeholder meeting at Franchise Tax Board headquarters from 1:30-3:30 PM on Thursday, Nov. 14 to learn more about the implementation process, get questions answered and offer input.

Meeting location:
Franchise Tax Board
California Town Center
9646 Butterfield Way
Sacramento, CA 95827
​
For more information about the stakeholder meeting, as well as to submit questions in advance, email: [email protected].

A dissection of the major phishing attack types and the paths to guarding against them
by Scott Lewis
October 10, 2019
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In today’s connected world, there is a need for collaborative software and services, but these resources could be exposing you to phishing attacks. Couple the need for collaboration with the need for immediate access to data, then add the human factor, and you have all the dynamics for a robust phishing attack. The following are different types of phishing scenarios and how they each target specific people and processes.

• Spear phishing—A targeted attack on a group of emails that were harvested via social media or email lists that were purchased through trade shows, conferences, online newsletters or other organizations and companies—these addresses were supplied by the address-holder when they signed up for a service of some kind and provided their email address
• Whaling—A focused email attack, typically on high-profile individuals, which could include C-suite individuals, such as chief financial officers, chief information officers or chief operating officers
• Smishing—An attack via short message service (SMS) focused primarily on mobile devices and conducted via text messaging
• Content injection phishing—An attack in which phishers insert malicious code or misleading information into emails or websites, encouraging people to input user credentials and password information or perform other activities, such as transfer of funds
• Man-in-the-middle phishing—An attack in which phishers position themselves between the legitimate websites people use, such as social sites or banking sites, and is difficult to detect because it typically continues the transaction and does not create any disruptions 

Getting StartedSo, how can you start a plan to protect yourself and your business? According to Gillware’s data recovery and digital forensics experts, the following are some primary steps to take. 

• Consider compliance—In almost every industry, there are federal and state compliance measures that you have to consider. Regulations like General Data Protection Regulation (GDPR), which is already in effect, applies to any company that processes individual data of European Union citizens, even if the citizens live in the United States. 
• Create an incident response plan—The incident response plan should outline how your company is going to respond in the event that a breach is suspected or confirmed. The program should describe the roles and responsibilities of senior executives because they will likely be the point of contact for coordination and information dissemination. Who will talk to the press (if necessary)? Who will be responsible for the collection or remediation processes and damage control? Your response plan can also outline how those remediation and confirmation steps are going to be addressed and implemented. 
• Use blockchain and artificial intelligence—Consider ways to make yourself less of a natural target. You can do this by keeping your security devices and software up to date. With scammers using increasingly intelligent and speedy methods to gain access, using artificial intelligence (AI)to look for patterns and analyze risks is becoming more and more critical to overcome emerging threats. For instance, Bandura’s Threat Intelligence Gateways, which block known internet protocol (IP) and domain threats, is a good example of how AI can bolster your security.
• Protect your email system—Email systems continue to be the favorite spot for phishing attacks and other viruses, such as cryptoviruses and ransomware, along with a multitude of other malware. In systems like the Microsoft Office 365 E5 plan, users can take advantage of the anti-phishing option in the security and compliance center, with instructions in the user portal on how to configure for your application. In-house systems also have many tools to choose from— companies like Symantec, Barracuda and many others offer advanced phishing detection and prevention features. Remember: No single device will protect you. Security is a layered approach with many nets to trap the emerging threats. 
• Stop data breaches before they start—This begins with good employee policies and ongoing training for employees to identify those who may be more susceptible to phishing and security attempts. Also be proactive in keeping your systems up to date. 

Spotting a ScamWhen you have updated systems, new firewalls, advanced threat detection and antivirus protection in place, but you still become a victim of a phishing scam, you’re left to wonder, “How can this be happening?” According to Protected Trust, cloud security and productivity company, here are some things you can watch for: 

• Are you familiar with the sending address?—Take the time and read the email address. One way to help spot small subtle changes is to read the email address backward. It might sound funny, but it makes your brain stop and think about what you are reading, instead of using the human condition to understand what it expects to see. Other questions to ask: Do you know this person? Have you ever exchanged emails with them before? Are they asking you to do something that is outside of the norm or expected? If it seems fishy, then don’t hit “Reply” or “Reply All,” but type the actual body of the email in the “To” or “CC” field.
• Are there misspellings?—Several spelling errors in the email address and the body of the email are warning signs. Turn on spell check to ensure that the message is highlighting these spelling errors.
• Is there a high sense of urgency?—If the sender is insisting that you have to act now, this elevated sense of urgency should be a red flag. Remember: The lifespan of a phishing site is only 15 hours, so things must happen quickly. 
• Is the scammer trying to direct you to a new URL?—If the message says, “Visit this link and input your username and password,” it’s a red flag. Instead of clicking on the link, use Google to look up the URL. You can also hover your mouse over the link, and it will show you the fully qualified address of where you would be directed if you clicked on it. On mobile devices, you can use a light touch to see the fully qualified address. The risk here is that if you press too hard, you will be directed to the phishing site. Always remember that your bank, the Internal Revenue Service and other government agencies will not contact you directly via email.
• Does the URL feature a closed lock?—Make sure that the URL line features the image of a closed lock or begins with “https://.” Specifically, the “s” indicates this is a secured website. Also, your browser may put a circle with a red “x” or hash sign through unsecure URLs.

All of these steps are important; however, the real weakness is in human conditioning. As such, it is essential to communicate and train employees on the risks of phishing, how it happens and what they can do to be aware of the dangers. Several products allow you to test your employees with fake phishing attempts. These will help you identify who within your employee base is likely to fall prey.

ABOUT THE AUTHORScott Lewis is the president and chief executive officer of Winning Technologies Inc. He has more than 30 years of experience in the technology industry and is a nationally recognized speaker and author of technology subjects. Visit winningtech.com.