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5 Tips for Improving Your Small Business’s Financial Health

5 Tips for Improving Your Small Business’s Financial Health

Are you a small business owner struggling to keep your finances in check? Do you constantly worry about cash flow, expenses, and profits? You’re not alone. The financial health of a small business is crucial for its survival and growth.

Here at Protea Financial, we have come up with five essential tips that can help improve your small business’s financial health. From managing and tracking expenses to investing in growing your business to increase revenue, these tips are easy to implement and will help you achieve financial stability in no time! So, let’s dive right in!


Track All Business Expenses

It’s important to track all your business expenses to see where your money is going and adjust as needed. This can be done by setting up a simple spreadsheet or using accounting software. Make sure to include all expenses, both big and small, to get an accurate picture of your spending.

Once you have started tracking your expenses, reviewing them regularly is important. This will help you find places within your business where saving money may be possible. It’s also a good idea to compare your current expenses to those from previous months or years to see if there have been any changes in your spending patterns. It also helps you see where money may be wasted if you pay for products or services your business no longer needs.


Spend Some Money on Investments That Will Help You Grow

If you’re not investing in your business, you’re not giving it a chance to grow. Investing in marketing, product or service development, and employee training can seem risky. Still, it will eventually stagnate if you don’t put any money into growing your business.

Consider what investments will help you reach your goals, and then plan to invest some money each month or quarter. You may wait to see results, but over time, these investments will help you build a stronger, more successful business, which leads to increased revenue.

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Set Realistic Goals

If your small business is in financial trouble, setting realistic goals for improving your financial health is important. Otherwise, you could take on more debt than you can handle or make unrealistic cuts that hurt your business in the long run.

Here are some tips for setting realistic goals when trying to improve your small business’s financial health:

  • Make a list of all your expenses and income sources. This will give you a clear picture of where your money is going and coming from.
  • Determine how much you can realistically cut from your expenses without hurting your business. You may need to make tough choices, but being realistic about what you can live without is important.
  • Create a budget and stick to it. Once you know where your money is going, you can set aside funds for specific purposes. Ensure to include a buffer for unexpected expenses so you don’t get overwhelmed if something happens.
  • Make a plan for paying off any debts you have. This may involve getting a consolidation loan or working out a payment plan with creditors. Whatever you do, ensure you can stick to the plan so you don’t end up deeper in debt.
  • Set aside money each month to build up an emergency fund. This will help you cover unexpected expenses without using credit cards or loans.
  • Finally, review your progress regularly and adjust your goals as needed. Your financial plans should change as your business grows and evolves.

By following these steps, you can set realistic goals that will help you improve your small business’s financial health.

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Regularly Update Your Cash Flow Forecast

Like most small business owners, you don’t have much extra money. That’s why keeping a close eye on your cash flow is important.

One of the best ways to do this is to update your cash flow forecast regularly. This will help you anticipate when you’ll need additional funding and identify potential problems before they become too big to handle.

Here are a few tips for updating your cash flow forecast:

  • Make sure you have accurate financial statements. This includes your income statement, balance sheet, and statement of cash flows. These documents will provide the foundation for your forecast.
  • Use a spreadsheet or accounting software to create your forecast. This will make it easier to track your progress and make changes as needed.
  • Know your historical cash flow patterns. This will help you anticipate future needs and make more accurate projections.
  • Update your forecast regularly. This will ensure that it stays accurate and helps you identify potential problems early on.

Take the time to review this often. You want a solid idea of where your money is, where it is going, where it will be coming from, and how that will impact the future of your business. If you need to look at where your cash flow comes from or how it changes throughout the year, you may miss opportunities to invest more in your business or forget to save money for slower times.


Let Protea Financial Help Improve the Financial Health of Your Small Business

Small business financial health is an important part of success and one that should not be overlooked. Taking the time to review your finances, create a budget, track your spending, and look for opportunities to save and invest money can help ensure that you are in good financial shape.

Hopefully, you always feel like your small business finances are simple enough to understand. Let the team of professionals here at Protea Financial break down the documents and numbers you need to know. Contact Protea Financial today and let us help you improve the financial health of your small business!

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Take the time to learn how to improve the financial health of you small business with the experts here at Protea Financial. We can show you tips and tricks that can improve your bottom line!

Succession Planning – Preparing to Buy Or Sell

Succession Planning – Preparing to Buy Or Sell

As with most business transactions, supply and demand dictate the outcome. The same is true when buying or selling wineries and/or vineyards. With 2023 on its way, it is always good to take a step back, look at your business, and plan for the future. This article will help that process by looking at traditional buyers, reviewing pandemic transaction interruptions, inflationary impacts on mergers and acquisitions, and how to differentiate your business.

There are five typical winery/vineyard purchasers. The first is a generational transfer – the founder passing the property or business down to children.

Many owners start and grow a business hoping to pass it to their children – wineries are no different. Second, investment firms, such as venture capital or private equity firms, explore worthy targets to purchase – usually to streamline processes and sell again in 5–7 years. Foreign buyers seeking a foothold in the American market comprise the third group. Larger alcoholic beverage companies (i.e., Gallo, Diageo, Constellation, etc.) aiming to scale and expand their portfolio by purchasing assets is the fourth group. Last is the lifestyle purchaser enamored with the wine business and our beautiful area.

Many of these buyers hit the pause button in March 2020. However, just as many quickly moved forward with deals in the pipeline or already in progress. Investment firms had money set aside and a mandate to acquire more assets, and these firms kept the market active with several acquisitions. Lifestyle purchasers also saw the opportunity to move away from urban centers and purchase a vineyard with a residence. With low-interest rates, borrowing money was inexpensive and viable to finance an acquisition. The combination of these factors made for a strong seller’s market.

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Over 2022, we saw interest rates increase with the fear of inflation. Debt financing (borrowing money to fund a purchase) became much more expensive. The availability of capital/cash affected the supply and demand. A seller’s market moved back to a buyer’s market. The ability to borrow money and the expense involved means buyers value property and assets differently. What one million dollars could buy at the beginning of 2022 was much less at the end of the year. Sellers that once thought their assets were worth a certain dollar amount were disappointed when offers were much less.

Most buyers look for a return on their investment. Thus, with higher interest rates and the greater expense to borrow, purchase price offers decreased in value. If debt financing is more expensive, it will likely drive prices down. As inflation fears remain, the cost of business also increases. Add other pandemic-era obstacles, such as supply chain issues, finding competent employees, and local governmental hurdles, and the return on investment shrinks, decreasing a buyer’s asking price.

Of the many potential impacts of this change on the mergers and acquisitions market, two stand out. First, buyers are demanding that a financial contingency is included in purchase and sale agreements. This allows a potential buyer to examine lending and financing possibilities, such as loan terms or investor requirements, during the due diligence period or a separate financing contingency period. If financing does not work out for the buyer, the buyer can terminate the agreement. Such contingencies were not common during the period with low interest rates and high demand for property.

The second is more complicated and involves alternative payment structures for a buyer to pay the purchase price. These structures allow the buyer to pay less cash at the closing and include various means to pay off the purchase price balance over time.

Seller financing, for example, is one common way to accomplish this. The buyer delivers a portion of the purchase price in cash, along with a promissory note for the purchase price balance. The promissory note should be secured by a deed of trust, with the seller as the beneficiary in the event of default under the promissory note.

Other possible alternatives provide for the seller to retain a certain percentage of the company (in the case of an equity rather than an asset sale), the seller keeping some of its land yet providing the buyer with the right to purchase that land at a later date, and the buyer offering a certain percentage of buyer’s company as compensation for the land (rather than cash). In this last scenario, a buyer pays a portion of the purchase price in cash and then grants equity in the buyer’s company to the seller at a value equal to the balance of the purchase price.

Another alternative is an earn out. Under this scenario, a portion of the purchase price is paid at closing, and the balance is estimated based on projected post-closing metrics – typically yields, sales goals, cost margins, and similar items. The balance of the purchase price is then paid to the seller at later dates if/when certain milestones are achieved, or the targeted metrics are realized. 

This scenario can cause conflicts between a seller and buyer as the two remain wedded for this post-closing period until the purchase price is paid in full, and disagreements over the milestones and metrics may arise. Very often, accountants and financial advisors are involved in calculating the metrics. The seller may see the buyer’s conduct as detrimental to the seller’s ability to reach those milestones or obtain targeted metrics. The result is not always as initially planned.

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Other effects on these transactions, which may occur in a more buyer-friendly market, are longer exclusivity periods, longer due diligence periods, purchase price adjustments, and requirements to amend or terminate existing agreements. These contingencies put pressure on sellers to have their assets, contracts, books and finances, and historical records in proper order before negotiating with a buyer.

A seller with organized documents and business operations can be better positioned. In addition, quality (of location and product) and water remain significant influences on buyers. In the last decade, having an adequate water source has risen to the top of the concerns and needs a buyer seeks. Ensuring legal, permitted, and secure water sources is a necessity for any potential seller. Quality soil, vines, and grapes certainly follow from that, as does wine club membership and a reliable margin on the cost of goods sold. 

Despite these hurdles, lifestyle buyers are looking for the right location, and investment firms mandated to spend money. Thus, there remains hope for sellers. 

To be successful in this process you must prepare and organize.  First, assemble your team.  Your attorneys, accountants, bookkeepers, bankers, financial advisors, civil engineers, managers, employees, and others should make up your team.  Second, use your team to pull together documents and information on every aspect of your business, such as organization documents, financial records, and land use permit.  Clearly segregate information into distinct categories.  The asset is not just the land and/or business but everything attached to it – trademarks, wine club lists, existing contracts, easements, water sources, and goodwill.  Finally, identify missing pieces and strive to locate, replace, or create what is missing. 

Hard work on the front end will lead to a successful transition later.  As trusted advisors to winery and vineyard owners, CMPR has assisted hundreds in this process.  We aim to provide excellent service to our clients with a collegial, teamwork approach.  Please contact Jeremy Little with any questions: jlittle@cmprlaw.com

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How to Speak the Same Language as your Sales and Marketing Counterparts

How to Speak the Same Language as your Sales and Marketing Counterparts

The Wine Industry has a common language, but do we use it between different disciplines? 

Stick to 3 rules to empower your colleagues…so that they can help you do your job better.

Many wineries and businesses find themselves hesitant to hire outside help because it seems like heavy-lifting to onboard a new person. Similarly, departments within the same organization can shy away from efforts of collaboration, citing concerns of extra unnecessary work. 

Whether working with outside agencies/consultants, or making new efforts cross-functionally, a lot of that headache can be minimized with proper communication.  This can especially be true between finance teams and their sales and marketing colleagues.

The Real Estate industry will tell you their guiding principle is “Location. Location. Location.”  In the crowded wine industry, to succeed with both consumers and the trade, the rule is “Communication. Communication. Communication.”


Consider this classic scenario in the wine industry:  

Sales & Marketing develop a campaign that is projected to meet goals and bring home some revenue. The salaries of those positions may even depend on the campaign’s success. Finance colleagues develop a smart protocol for tracking things properly and sustainably. Then, when the campaign indeed turns successful and everyone should be high-fiving (or toasting) each other, they are instead losing sleep and scrounging together elusive details on both sides.

The added stress is often a consequence of mutual, sub-par communication.  How did we get here? The wine industry is magnetic and draws people in from all over the globe.  Many are strong communicators and even speak multiple languages.  However, there is so much focus on brand communication, that we sometimes overlook the importance of internal communication. The way we communicate internally can be the difference between sleepless nights and win-win success stories.

This begs the question, how do we improve the way we communicate between different disciplines, in order to get the win-win? 

While Finance cannot control the outcome of Sales & Marketing initiatives, they can likely control the process with a few guiding principles.   These principles can be viewed as 3 rules to speak the same language as your Sales & Marketing counterparts.

Are you in a finance or operations-related position in the wine industry?  Here are more details on the 3 rules to speak the language of Sales & Marketing, and empower them to help you.

Protea Financial Communication Between Sales and Marketing

1. Make things simple!

Simple is indeed harder. Take the time up front to create simple processes that help your colleagues communicate with their VIPs.

Simplifying Life for Colleagues is an Opportunity to Build Respect.

Examples: Sales colleagues’ VIPs are likely their top accounts. How can you think one step ahead, and simplify this communication for them?  Sales & Marketing colleagues are often led by the “more is better” approach, since more efforts often lead directly to more sales. This can lead to what appears to be messy efforts in the eyes of Finance teams.  If you can offer streamlined communication and a more simplified process for closing and reporting deals, it will count as success, both for you and for them.


2. Provide tools.

Learn about the challenges of your sales and marketing counterparts so you can improve the tools to help everyone succeed together.

Providing Useful Tools is an Opportunity to Create Efficiency for All.

Examples: Sales & Marketing colleagues often cannot predict outcomes as concisely as desired. A proper planning process would require accountability but also allow for realistic wiggle room.  Another challenge could be simply keeping up with the number of active promotions and campaigns, and understanding different rules and processes required for each.  Picture a sales professional who is expected to travel often or pop into account after account, without much scheduled office time. The frustration of sitting down to wade through emails can be real.   It might be time to look closer at the reporting process. Are the guidelines and possible forms streamlined/available on one platform for easy access? 


3. Invest in the relationship.

Sales & Marketing often rely heavily on relationships. This is the lens through which many deals are made and it is especially true in the wine industry. 

Investing in the Relationship is an Opportunity to Open up Communication.

Examples: The best sales professionals are often quite personable and have an ease of verbal communication. They might shine on the spot, but not always thrive in the rigid nature of reporting to their finance colleagues.  Find common ground with these colleagues in order to play their game and partner in a way that feels more comfortable to them.  Perhaps a regularly scheduled check-in meeting would help tie up loose ends? You might even learn something helpful, like how your deadline always falls on their big travel day.

In short, Make Things Simple for your customers.  Provide Tools for your trade partners.  And, Invest in the Relationship of both parties.  The above “rules” are quite simple in nature, but are often overlooked in a crowded, product-driven industry.  If we go back to the basics, we are reminded that often simple is harder, but simple is better.  Communication plays the leading role in being “simple”, and this leads to team success.  

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Communication is an Incredible Asset in the Wine Industry

Strong communication is a theme that successful brands and teams will carry through from internal team communication, all the way to brand communication for consumer and B2B initiatives. One could say that successful communication about brands and products in the industry usually follow the same 3 rules, and they often come down to communication, communication, communication.

The win-win scenarios may take more work up front. However, after the investment in clear messaging, streamlined tools, and collaboration, we will all be toasting each other in the end.


About Clarity & Co

Clarity & Co’s mission is to offer marketing consulting, trade relations, and project management services to the premium wine industry, and to do so with clarity and collaboration, or Clarity & Co.  Owner Theresa Wray is a marketing & communications professional who believes in the power of communication to transform brands and teams.  For more information, visit www.clarityandco.com.

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3 Steps to Set Your Business Up for Success in 2023

3 Steps to Set Your Business Up for Success in 2023

As we begin a new year, I reflect on two common (and related) questions I’m often asked by business owners or leaders: 

“How can I set my business up for greater success this year than last year?”, and 

“How can I accomplish this without working even more hours?”

These three key steps will surely set your business up for a very strong year ahead.


Identify Clear, Desired Outcomes for Your Business, Before Developing Detailed Plans

In January 2024, as you reflect on your business in the prior year, what specifically do you want your business to have accomplished? You would be shocked to know that only 20% of people set goals. And according to a Harvard Business Review study, those who set goals are 10 times more successful than those who don’t. Why is that?

You (and your teams) are more productive if everyone is focused on specific achievements each day, week, or month. You can start by giving your team direction, which then increases productivity. The goals provide clarity and enable everyone in your organization to understand exactly what you are seeking from the company.

By having clear expectations, you can hold yourself and your team accountable for results. No one can say, “I didn’t know what we were trying to accomplish,” if you make it very clear what, in fact, your goals are for the coming year. Contrary to what some may think, good employees actually embrace accountability. Like you, they also want a “scorecard” to evaluate their performance. Accountability also increases employee engagement, strengthens performance, improves attitudes, and generally creates an environment that energizes your team.

How should you set goals? Is there a specific format that works best? Many people prefer S.M.A.R.T. goals: specific, measurable, achievable, relevant, and time-bound (meaning some deadline or allotted time frame). Some companies set KPIs – Key Performance Indicators for their teams. With KPIs, you (or your team leaders) work directly with individuals to determine what results will demonstrate success and achievement of your goals.  

I always prefer simplicity. I often ask people this: what are some résumé-worthy accomplishments that you want to achieve at the end of the year? In other words, consider the three or four desired outcomes you would include on your résumé for the following year. If you wouldn’t have it on your résumé, it probably isn’t a true “needle-moving accomplishment” for your business. 

I often hear people get hung up on whether something is a “goal” or an “objective.” I prefer to use the term “desired outcomes simply.” Perhaps your desired outcomes are financial and very specific. Or the outcome you desire may be less easy to measure, but you will “know it when you see it.” For example, you may realize that the key to your success this year is to develop a strong team that works together better. Measurement of success of that goal may be difficult, so paint a picture. What will a “strong, cohesive team” look like? How will you know? Paint a picture so that you and everyone on your team can clearly articulate what that outcome looks like.

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Move Away from Dysfunctional Team Tendencies

In his bestseller: The Five Dysfunctions of a Team, Patrick Lencioni writes that teams that excel in 5 main areas are more likely to be high-functioning, cohesive teams. The five areas are: 1) Trust, 2) Conflict, 3) Commitment, 4) Accountability, and 5) Results. Many companies, however, fail to focus on building the foundations of the team and never achieve the results they genuinely seek. Each of these five areas can be developed, but the leaders must create an environment and commit to spending time to make these work. In particular, the first two areas can be addressed by an owner/CEO who cares and who wants to create meaningful improvement in their company.

The first, and I believe, most critical focus is “Trust.” Dysfunctional teams have an absence of trust, aren’t “real” with each other, and demonstrate invulnerability. High-functioning teams, however, trust each other. Deeply. They respect and accept each other. They are comfortable being vulnerable, and they trust the needs, competence, strengths, and character of each other.

Trust obviously doesn’t happen “overnight.” As a leader, you can create an environment that inspires trust. You can acknowledge, listen, and reward people who are willing to be vulnerable – to seek improvement. You can encourage people to challenge “sacred cows” or processes that need to be fixed, but no one has been willing to speak up. When people confront you in a manner that is genuinely seeking positive change, you should listen. Acknowledge that you hear what they are saying, and take the comments to heart. You certainly need to be able to differentiate between people who are being constructive vs. destructive. But don’t immediately get defensive. If you want to know what is going on in your company and what truly needs to change, then show respect to people willing to take a risk, speak up, and be vulnerable.

The second characteristic of high-functioning teams is dealing effectively with conflict. Do you encourage open, candid dialogue and constructive conflict? Or do you seek artificial harmony where people can’t discuss real issues, avoid conflict, and speak up …often because people in power don’t listen.

I once led an internal company workshop among the key organizational leaders. One of the people said that they felt that sometimes the CEO would gain agreement in the leaders’ meeting to a new process or rule. Still, the CEO would more-than-occasionally take actions after the meeting that appeared to not be in accordance with what had been agreed upon by the leaders. At that moment of our meeting, the CEO had the opportunity to have a candid dialogue and deal with conflict constructively. Instead, the CEO fired back that the person making the “accusation” was wrong and demanded they come up with another example because “clearly they didn’t get this example right.”

Instead of creating an opportunity for positive dialogue and discussing real issues in the spirit of finding positive ways to change, the CEO chose to shut down the conversation. In doing so, he created very bad feelings among most of the leaders and effectively shut down any good that might have come from a discussion. In the end, instead of a positive workshop that could bring the team together, the result could have been better. Team members shut down, trust was crushed, and commitment by each of the leaders was not able to be developed.  

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Measure Sales Activities … not Just Sales Results 

The third step you can take in 2023 to create meaningful improvement for your business is to focus on measuring sales activities, not just the results. Pick a small number of activity-based metrics and then stick to them.

One of the biggest sales management mistakes companies can make is to focus on sales results rather than on sales activities. At first glance, that sounds strange. Our inclination in managing sales is usually to focus on results! So why should you focus on activities more than results?

Results are typically lagging indicators – meaning that the results lag behind the activities that drive the results. If you are measuring results for products or services with longer lead times and you don’t get the results you seek, it is too late to make meaningful changes to affect results that year.

Think of the example of weight loss.

You set a goal for the new year, let’s say, “I want to lose 36 lbs. in 2023.” You decide you can achieve this over the course of the year. If you focus only on measuring the results at year-end, it is too late to change if you miss your target. Even if you measure the results monthly but not the activities, you will learn sooner that you are missing your goals, but you won’t necessarily understand why and what to do about it. Instead, consider developing a clear strategy and measuring the activities that will drive weight loss. Each week, you set activity goals: consume X calories by eating specific meals each day and exercising X minutes each day. You don’t control the scale, but you do control the activities that drive the results. You know immediately how many calories you have consumed in a day or whether you ran for 30 minutes per your plan.

The same approach should be followed with sales management. Set realistic goals (SEE #1 ABOVE). Then, develop a strategy and plan of attack. For example, what activities do you need to do in order to bring 20 new prospects into your pipeline? Are you following those activities? How many follow-up calls will you likely need to make to close a deal? Are you making those calls?

For consumer products like wine, identify reasonable and achievable goals. Then determine the activities needed to generate those results. And track those activities. For example, how many retailers do you typically need to meet to close 10 sales? Are you conducting all those meetings? Or how many wine tastings do you need to have in order to generate your desired wine club memberships? What are the activities that will drive tastings? Identify and track those activities.  

If you are interested in learning more secrets to measuring and managing sales performance, I recommend Jason Jordan’s book, Cracking the Sales Management Code.

In summary, I encourage you to take these three steps in 2023 to propel your business forward. 

First, identify clear, desired outcomes for your business before developing detailed plans. Second, move away from dysfunctional team tendencies. Instead, invest time and energy in building trust and creating an environment where your team manages conflict directly and respectfully. Finally, focus on measuring sales activities – not just sales results. Determine the activities that will drive the desired results, then monitor, track, and hold people accountable for those activities.


Carter Welch is an accomplished business leader, consultant, and coach responsible for driving success in numerous businesses, large and small. A former Procter & Gamble and Pillsbury executive, he focuses today on guiding small business owners to identify obstacles, overcome fear, develop winning strategies, lead organizations, and ultimately, achieve great success. He can be reached at 707-339-2842 or by email at carter@carterwelch.com.

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Gear Up for These 2023 Changes to California Employment Law

Gear Up for These 2023 Changes to California Employment Law

It’s the time of year again to dive in and take a look at upcoming changes to California employment law. This fall, Governor Newsom approved several new employment laws, generally expanding on employee rights and creating new obligations for employers. From new pay scale disclosure requirements to mandatory bereavement leave to nuanced changes to the California Family Rights Act, here are summaries of a few key bills signed into law, that go into effect on January 1, 2023.


SB 1162: Pay Transparency & Data Reporting Requirements

New pay scale disclosure requirements. In 2017, California led the nation by passing the first mandatory pay transparency law, which required employers to provide pay scale information (i.e., annual salary or hourly wage range) to job applicants upon request. Effective January 1, 2023, SB 1162 will expand the law to require:

  • Employers with 15 or more employees must now include in all their job postings the “salary or hourly wage range that the employer reasonably expects to pay for the position.” If the employer uses a third party to publish or post a job, that third party must also include it in the posting.
  • Upon an employee’s request, all employers must provide the pay scale for the requesting employee’s current position.
  • All employersmust maintain records of job title and wage history for each employee for the duration of their employment and three years after the end of employment so that the state’s Labor Commissioner – who is authorized to inspect these records – can determine if there is a “pattern of wage discrepancy.”

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Pay data reporting requirements. California currently requires employers with 100 or more employees, to submit annual pay data reports to the state’s Civil Rights Department (“CRD”) (formerly the DFEH). Current law allows employers to file an annual Employer Information Report (EEO-1) with the federal Equal Employment Opportunity Commission (EEOC) in lieu of the pay data report to the CRD.

  • Effective January 1, 2023, California employers will no longer be able to file the EEO-1 in lieu of the California report to the CRD. This is because California has expanded the required information to be reported beyond what the EEO-1 requires. Thus, SB 1162 will require employers with 100 or more employees to submit a separate report to the CRD, including:
    • The number of employees by race, ethnicity, and sex in 10 job categories, based on a “snapshot” that counts all individuals employed in these categories during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year.
    • The job categories include: (1) Executive or senior-level officials and managers, (2) First or mid-level officials and managers, (3) Professionals, (4) Technicians, (5) Sales workers, (6) Administrative support workers, (7) Craft workers, (8) Operatives, (9) Laborers and helpers, and (10) Service workers.
    • Within each job category, for each combination of race, ethnicity, and sex, the median and mean hourly rate.
    • The total number of hours worked by each employee in each pay band during the reporting year.
    • The employer will have the option, but is not required, to provide clarifying remarks regarding the information provided.
  • Employees hired through labor contractors. In addition, employers with 100 or more employees hired through third-party labor contractors must also submit a separate pay data report to the CRD covering those employees and disclosing the ownership names of all labor contractors used to supply such employees. A labor contractor is defined as “an individual or entity that supplies, either with or without a contract, a client employer with workers to perform labor within the client employer’s usual course of business.”

The bill also changes the deadline for all future pay data reports from March 21 to the second Wednesday of May each year, beginning in 2023.


Penalties for noncompliance with SB 1162

  • Employees claiming an employer’s noncompliance with the pay disclosure requirements may file a complaint with the California Division of Labor Standards Enforcement (DLSE) within one year of the date that they learned of the violation.
  • If the DLSE finds that an employer violated the law, employers may be subject to civil penalties of $100 to $10,000 per violation. The Labor Commissioner will determine the amount of the penalty based on the totality of the circumstances, including prior violations.
  • Notably, no penalty will be assessed for a first violation where an employer shows that “all job postings for all positions have been updated to include the pay scale.”
  • If an employer fails to file the pay data reports, the CRD can seek a court order requiring compliance and recovering costs associated with seeking such an order. A court also can impose civil penalties of $100 per employee, and up to $200 per employee, for subsequent failures to file the report.
  • If an employer cannot comply because a labor contractor has not provided the required pay data information, a court may also apportion an “appropriate amount of penalties” to the labor contractor.


Private right of action for injunctive relief

  • SB 1162 also includes a civil private right of action for injunctive relief “and any other relief that that court deems appropriate.” Very little detail is provided in the text of the bill regarding what that private right of action will entail, and who will have standing to pursue such an action.
  • The bill simply provides: “A person who claims to be aggrieved by a violation of this section may also bring a civil action for injunctive relief and any other relief that the court deems appropriate.”

It is expected that the CRD will publish additional information, including FAQs and a User Guide for Employers, in the coming months.


Changes to the California Family Rights Act (“CFRA)

AB 1041: Paid Sick Leave and Family Leave Expanded to “Designated Persons”

Effective January 1, 2023, AB 1041 will expand the California Family Rights Act (“CFRA”) and the Healthy Workplaces, Healthy Families Act (“HWHFA”) to allow employees to take paid sick leave and family leave to care for a “designated person” chosen by the employee, including non-family members. The definition of designated person is: “any individual related by blood or whose association with the employee is the equivalent of a family relationship.”

An employee may change their designated person once per 12-month period.

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AB 1949: Job Protected Bereavement Leave

Effective January 1, 2023, AB 1949 will expand the CFRA to allow an eligible employee to take up to 5 days of bereavement leave upon the death of a family member.

The leave must be completed within three months of the date of death. The new law requires that leave be taken pursuant to any existing bereavement leave policy of the employer. If no such policy exists, leave may be unpaid. However, the employee may use other leave balances, such as accrued paid sick leave, towards the bereavement leave.


California’s Privacy Rights Act (“CPRA”)

California’s Privacy Rights Act (“CPRA”) will become effective January 1, 2023. Under the CPRA, “consumers,” including employees, will be able to exercise several new rights including:

  1. The right to know (request disclosure of) what personal information was collected by the business about the consumer or employee, from whom it was collected, why it was collected, and, if sold, to whom;
  2. The right to delete personal information collected from the consumer or employee;
  3. The right to opt-out of the sale of personal information (if applicable);
  4. The right to opt-in to the sale of personal information of consumers under the age of 16 (if applicable);
  5. The right to non-discriminatory treatment for exercising any rights; and
  6. The right to initiate a private cause of action for data breaches.
  7. The right to correct inaccurate personal information; and
  8. The right to limit use and disclosure of sensitive personal information.

Because the new law applies these protections to employees, and not just consumers, the CPRA presents a unique set of challenges for employers. The most notable is understanding what employee data the employer holds, where that data is stored, and which data is truly essential and that which should be deleted at an employee’s request.


SB 1044: Emergency Working Conditions

SB 1044, which will also become effective January 1, 2023, prohibits an employer in the event of an emergency condition, from taking or threatening adverse action against any employee for refusing to report to, or leaving, a workplace or worksite because the employee “has a reasonable belief that the workplace or worksite is unsafe.” An emergency condition is defined as:

  1. Conditions of disaster or extreme peril to the safety of persons or property at the workplace or worksite caused by natural forces or a criminal act.
  2. An order to evacuate a workplace, a worksite, a worker’s home, or the school of a worker’s child due to a natural disaster or a criminal act.

Notably, an emergency condition does not include a health pandemic.

SB 1044 also prohibits an employer from preventing an employee from accessing the employee’s mobile device or other communications device in order to seek emergency assistance. An employee is required to notify the employer of the emergency condition requiring the employee to leave or refuse to report to the workplace or worksite.


In Conclusion . . .

Before the end of 2022, employers should review their policies and procedures to ensure compliance with these new laws. Employers should also reach out to their employment counsel with any questions regarding these pending changes. Proactive changes and working with counsel will help protect employers during this season of change!

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